Dubai real estate on road to recovery

Although cash and confidence issues still prevail, Dubai's property market will witness the first green shoots of recovery sometime between the end of 2009 and the second quarter of 2010, according to a panel of industry experts speaking here yesterday at the third 'not for profit' Cityscape Connect business breakfast.

Attended by more than 100 property executives, legal advisors and investors, the industry forums were initiated to stimulate networking, transparency and open debate on the key issues affecting the Dubai real estate industry which although experiencing a dramatic reversal of fortunes, is now showing signs that the market is stabilising and prices are beginning to bottom-out.

Elaine Jones, CEO of Dubai-based real estate agency Asteco echoed the sentiment of the panel, "It's about cash & confidence. For example, we need to reduce interest rates, relax lending criteria and address the residency visa issue. This will at least start to bring back much needed confidence to the market and begin to stimulate growth."

Indeed investor confidence was debated at length, examining numerous issues such as defaults, incomplete projects, late payments and fraud. "Trust is strained," stated Sunil Gomes, of Guru Real Estate. "Credibility is king, if we lose that we have nothing. Projects must be completed and investors better protected."

Steven Henderson, Partner in legal firm Clifford Chance, agreed that trust was paramount but added that the law had previously been struggling to keep up with the rapid growth of the market and that an over regulated market might have an adverse effect and stifle growth.

"Dubai has introduced Escrow accounts and the Strata law, but a federal law for real estate would also help to restore confidence. Banks also have a role to play here especially when developers experience credit or cash flow problems," he said.

Difficulties in the banking sector have been widely reported, however, the panel agreed that although credit was available for exceptionally low risk customers, besides rates and approval ratings, the sector needed consistency.