CEO of property agency Damac expresses issues over 'costly' Dubai

DUBAI, United Arab Emirates — Dubai’s property scene is exhibiting no signal of cooling off, as 2024 is on observe to be one other report 12 months when it comes to gross sales figures and property values, in line with native actual property corporations.

Rising demand for property, particularly within the luxurious area, is boosting costs not simply of houses, however of all the things else within the metropolis — simply because the United Arab Emirates is predicted to emerge because the world’s top wealth magnet for the third consecutive 12 months.

For Hussain Sajwani, chairman of Dubai property big Damac, that spells each good and unhealthy information.

“What issues me a bit bit in Dubai is that [it’s] changing into an costly metropolis, and I’ve stated this up to now, that Dubai [is] going to be [an] costly metropolis. As a result of at any time when there may be a lot demand, and particularly when gifted individuals, common individuals are coming, they create extra demand,” Sajwani instructed CNBC’s Dan Murphy from Riyadh on Tuesday.

“So in the present day, to get a seat in a faculty is tough … and naturally, the enterprise goes to boost costs, and inflation [is] going to be excessive, so Dubai goes to be an costly metropolis,” the chairman stated. “And I hope [the] authorities discover methods and means. And it is not straightforward to seek out methods and means when there’s a steady inflow of individuals to the town.”

The most recent Dubai property market numbers inform a narrative of burgeoning demand. In July of 2024, property gross sales reached 49.6 billion dirhams ($13.5 billion), a 31.63% enhance from the identical interval in 2023, in line with locally-based brokerage agency Elite Benefit Actual Property.

“The primary half of 2024 alone noticed over 43,000 property transactions valued at roughly AED122.9 billion, marking a 30% enhance from the earlier 12 months,” the agency’s report launched on Sept. 10 wrote, including that the expansion is due partly to the “speedy absorption of latest stock.” Round 80% of the items launched since 2022 have already been offered, the report estimates.

“The Dubai property market is doing extraordinarily effectively, and I believe we’ll proceed to do effectively, as a result of the demand in Europe is superb,” Sajwani stated. “Everyone needs to go to Dubai, from the taxi driver to the waiter to the businessman … Dubai now could be attracting a variety of not solely rich individuals, however a variety of gifted individuals. And it is rising in a special stage from pre-Covid.”

The Damac founder famous the way in which by which the Covid-19 interval supercharged Dubai’s recognition as a spot to reside: whereas a lot of the world remained in lockdowns, the emirate inspired tourism and attracted new residents with the assistance of visas for distant employees and entrepreneurship.

“Dubai in the present day is a worldwide metropolis, by all means, and attracting a variety of expertise and a variety of companies, we’ll proceed to develop,” Sajwani stated.

Dubai has skilled a unstable boom-and-bust cycle up to now, most notably throughout its 2008-2009 disaster interval, when the emirates’ property market crashed, and quite a few traders needed to default on their money owed. Requested if he was fearful a couple of related cycle repeated itself, Sajwani expressed confidence that the system was completely different now.

Requested if Dubai is extra secure now, Sajwani replied: “100%.”

“One of many key cause for that’s that the rules the Dubai authorities introduced in after [the] ’09 or ’08 crash has been superb rules. Very, very strict on builders, on prospects, and on zoning,” he stated. “In order that regulation helps — not all people simply can come and enter the market and simply launch a undertaking … There may be very strict escrow, so the shopper’s cash could be very a lot protected, and that is what makes the market very environment friendly.”