x Abu Dhabi, UAEFriday 19 January 2018

'Sense of reality' emerging in Dubai

Donald Trump Jr hits out at criticisms by international media, while developers wonder whether prices have hit the bottom.

Emirati officials stand near a model of the Palm Island, during the opening of the Cityscape Dubai on October 5, 2009.
Emirati officials stand near a model of the Palm Island, during the opening of the Cityscape Dubai on October 5, 2009.

DUBAI // The A-list movie stars were nowhere to be seen, and the most outrageous of the brightly coloured models were missing. Instead Donald Trump Jr and Sheikh Ahmed bin Saeed did their best to bring some star power to Cityscape Dubai as the trade show began yesterday, lacking much of the hype and imbued with a generous dose of reality.

The focus of the annual conference of developers this year was on how to cope with an economic downturn that has changed the rules of development in the UAE and seen prices decline by as much as 50 per cent. Crowds were smaller, and the mood in the halls of the Dubai International Convention and Exhibition Centre was subdued. Even Mr Trump, the son of the New York property magnate, was only cautiously optimistic in his keynote address. The Dubai property market was oversupplied and lacking a clear road to recovery, Mr Trump said, but was beginning to re-emerge with a "sense of reality".

"There was an element of one-upmanship before," he said. "I think we are starting to see people come back with a sense of reality of what you should and shouldn't do." While the mood was different at this year's conference, he said, things were more upbeat than the international media suggested. "Has Dubai changed? Of course," he said. "But it has been unfairly harshly criticised by the world media. Based on them, you think Dubai is a dust bowl with no lights turned on."

Sheikh Ahmed, the chairman of Dubai's Supreme Fiscal Committee, offered a positive outlook, telling reporters he was confident Dubai could repay its debts, including US$4.52 billion (Dh16.6bn) that comes due this quarter. For developers, sitting in plush leather seats at the stands and in the corridors, discussion focused on whether property prices had reached the bottom and the obstacles preventing buyers from coming back into the market.

"Everyone has been having difficulties," said Dr Wan Hasni, adviser in charge at the Tanmiyat Group. "It is showing the difference between the men and the boys. Those that are still here are the real developers." Developers and buyers were both being more prudent about investments, Dr Hasni said. Around the centre, the two largest stands belonged to Aldar Properties, which exhibited photographs of progress on projects such as Yas Island and had a DJ playing music, and Meydan, which is building a racetrack and development in the desert outside Dubai.

Angola made a big splash with a stand displaying models of massive developments underway. "Unlike Dubai, Angola has growing demand for housing," said Raul Silva, the chief executive of the investment arm of Ridge Solutions, the biggest developer in the south-west African country. "We are looking for strategic investment partners." Several developers said the most important element to a recovery was delivery of high-quality homes, buildings and services.

"The biggest challenge today is the customer appetite," said Khalid al Malik, the group chief executive officer of Dubai Properties Group. "Before, that appetite was driven by speculators. Now it's a different beast. You have to be careful with the product design. This is reshaping the companies in Dubai." Dubai Properties Group, the newly created property division of Dubai Holding, would focus on delivering five developments this year while the rest of its projects were "under review", he said.

"We haven't terminated or cancelled any project as of this point," Mr al Malik said. "Our portfolio is very large and we are reviewing projects we haven't launched." Mr Trump said the regulation of visas was a crucial concern. The system of cancelling visas for people who were laid off was "ostracising the same people who took the leap to come here". "You should be welcoming these people," he said. "If you throw them out, they are not likely to come back in six months when you need them."

In the back of one of the halls at the exhibition centre was Meraas Development, a new government-controlled property developer that emerged last year to announce a mammoth Dh350bn project called Jumeirah Gardens. As the property market worsened, it receded from view, only to make its official return yesterday. Sina al Kazim, a senior executive at the company, said Meraas was focusing on infrastructure near subway stops and developing villas on islands off the coast of Satwa and Al Wasl in Dubai.