Tuesday, October 06, 2009

Cityscape Dubai, Expectation and Reality

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.

I made my way into this year's Cityscape with feel good expectations. Smaller participation and crowd are not unexpected. Two giant developers withdrew and a day later returned to the exhibition after much persuasion.

Being in the industry all these years, and this time around I am no longer part of Nakheel, it is a kind of awkward. However, time to move on with more exciting challenges ahead.

According to the report,
while exhibition space is down 30 per cent this year and the number of participants is about 20 per cent lower, developers continue to showcase projects under construction as they strive to complete them.

The UAE economy, which depends heavily on oil, is expected to shrink 0.2 per cent this year, an improvement over an earlier estimate of 0.6 per cent, according to the latest IMF economic outlook.

Meanwhile, the World Bank expects the country to achieve 2.4 per cent growth in 2010.

Bankers and economists also say that the country is also expected to make a very strong rebound as the world economic situation improves.

With the economy picking up, the real estate sector can be pulled back up and potentially see some much needed stabilisation.

Across all asset classes, cash flow has declined this year, but is set to recover slightly during 2010, Proleads said in a report on the UAE's real estate sector compiled for Cityscape Intelligence. It said that only four per cent of total projects in the country were cancelled, which contributes one per cent to the total market budget value.

"This indicates that less expensive projects have been cancelled and more expensive projects are placed on hold."

Of the 1,328 projects -each project valued above $10 million ($36.73 million) - 704 are still being executed that have a budget of $398.63 billion. Meanwhile, 328 of these have been shelved, worth $243.31 billion, and 52 projects have been taken off the books, worth $7.96 billion.

Currently, approximately 30 per cent of projects are on hold. This highlights that the more expensive projects are on hold and that these projects constitute only one third of the market value, said the company.