I read the news recently that construction projects across the Gulf, worth at least USD2.4 trillions, are facing major delays due to a severe shortage of skilled project and programme managers.
One industry player said, a lack of engineering specialists is sparking huge salary increases for technical professionals, while jeopardising many projects. That means a lot of opportunities to Malaysians to join the current boom that could last few years more down the road.
“Developers are already being squeezed by higher concrete and steel prices, but with escalating salaries on top, many projects are already being delayed with profit margins eroding considerably,” he said in a statement.
The number of active projects in the GCC is close to 3,400, representing a combined value of $2.4 trillion, and the scale of construction activity is placing "severe strain on the viability of some projects."
Expert opinion has converged towards the view that supply will exceed demand sometime in 2010. Indeed only the endless delays in the delivery of completed units have kept putting back this evil day of reckoning.
Being personally involved in this industry as part of a world leading developer, I have my own concern about the so-called 'bubble waiting to burst' symptom that has been predicted again and again by the doomsayers and skeptics. According to some people, that is only a myth as well as not relevant in Dubai context.
Around the world, the property prices are already down especially after the subprime mortgage crisis that hit USA.
Booms go bust
Yet some are confident that this will happen as sure as night follows day. Real estate booms always go bust. It is just a question of when and not if it happens.
However, there lies the dilemma. Some people thought global property looked too hot in 2000 and yet many of these real estate markets are still booming today. And it has to be said oil prices are still high in the region and there is still plenty of liquidity.
But you could say the same about the regional stock markets and yet they got carried away with themselves and crashed. Property is just the same, and an excess of supply over demand usually means a correction.
My own Group CEO, an Australian with years of experience in the real estate development and the one who has successfully turned Nakheel into a world-class company with USD100 billion worth of projects around the world, dismisses the bust to happen anytime soon.
Of course, I believe him optimistically, not because he is my boss.....yes, this is Dubai my friends!
Nakheel chief dismisses idea of Dubai property crash
PROPERTY VIEW: Nakheel chief executive Chris O'Donnell.
Dubai’s property market is unlikely to crash but a maturing market will separate the winners from the losers, Nakheel’s chief executive said on Thursday.
“Dubai has certainly entered the next phase of property development whereby the consumers can intelligently and confidently shift through the myriad of property offering,” Chris O’Donnell said.
“The word ‘correction’ has been often misused in the property sector as a crash.”
As the market matures, prices in projects that do not offer value for money will fall, but the value of quality developments in the right locations will continue to increase, as a result of more regulation, consumer protection and transparency.
“If one wants the best product in the best location by the most reputable developers, the project will attract the right type of buyers who are more than willing to make that investment,” he said.
With 70,000 units expected to come on stream in 2009, analysts have said prices are likely to soften in the second half of the year.
But the city’s property market has exogenous factors that will help to propel property growth organically, O’Donnell said.
“Recently the New York Times ran an article about the region's young people wishing to make Dubai their new home to be part of the growth and in the process to re-affirm their self identity.
“I believe his typifies what is happening, in a small yet tangible way, around us in Dubai,” he said.
“What is important is not the state of the overall market, rather, how one reacts to the changing conditions. I believe that this is the time to be strategic and remain cautiously optimistic,” he added.
Property prices set to slump up to 20%
EFG-Hermes predicts 15-20% drop by 2011 in Dubai market as housing supply outstrips demand.