Damac: Dubai Property rates look set to fall by end of 2005

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By  Conrad Egbert Published  March 12, 2005

Damac: Dubai Property rates look set to fall by end of 2005|~|PeterRiddocNewweb2.jpg|~|Peter Riddoch|~|Damac Properties, an offspring of the Damac Group is currently one of the biggest private real estate developers in Dubai, with a string of élite properties on some of the most valuable land available. So naturally, Construction Week swung in to get the whole scoop in a meeting with Peter R. Riddoch, who is the chief executive officer for the freehold bigwig to find out what’s on the rise and where, and if you should seriously consider investing in property or not.

What is the current status of Damac’s projects?

At the moment we have 18 towers underway. Right from the Marina Terrace where we have three towers, to our latest The Crescent, our properties are doing very well. The Marina Terrace will be ready by the middle of this year; The Waves by the summer and The Lakes should be ready by 2006.

What are the future plans for Damac Properties?

Well, we have a few projects coming up but nothing that I could really reveal as they’re in direct competition with other developers, but we are looking at expanding within Dubai and the entire region as well.

Where do you see the real estate market in 5 years and is a market correction likely?

I think, since the UAE is a developing country the real estate market is doing considerably well. I do feel that there will be a pressure on prices later this year. Locals and expatriates could offer competitive rates and therefore wake up any slack or redundancy in the market. I feel that some prices would fall, definitely. But personally I don’t feel that property is all that expensive as it is made out to be. On the whole if you look at it from an international point of view I think people are being offered a very good price for the kind of property they get, and facilities available on those properties.
I think all our projects are world class with most of our properties get booked even before they are completed. If people did feel that property is unreasonably expensive in Dubai they wouldn’t invest in it in the first place, I suppose. So the fact that they’re actually going ahead and buying, just means that they do see value in what they are getting.

Speaking of the Waterfront Project – what impact has that had on Damac and are you planning on investing in it?

Most developers, including us are planning on investing in the Waterfront. But nothing in terms of the legalities or rules, so to speak of owning property there, has been put down in paper. Only guidelines have been drawn up so far, so we’re waiting for something concrete to be formed first. However, if you ask me about the project, I’d have to say that it’s great, and it shows how well Dubai has developed around that Marina. The Business Bay is fantastic as it’s ideal to make your way home - everything is so organised and central.
In fact the banks should be used as a sounding board to reflect the condition of the market. More and more banks have become comfortable in entering the property market as compared to earlier when the property boom was in its initial stages. It’s a very promising sign.

Do you think there are too many properties and too little buyers? Is demand really equal to supply?

Well, to be honest, it’s not an unreasonable match. Of course, there will be certain periods where supply will exceed demand and vice versa. In fact, I think it is when supply exceeds demand that the expatriates will enter the market. For, if supply exceeds demand, prices will automatically fall, rekindling the property rush, which in turn will again lead to a rise in demand and therefore rise in prices. It’s very simple really.
The property market is the best place to be in. Property growth is the best stock market in the world as it’s real; it’s not a whim of an analyst. It’s a worldwide trend, an unspoken rule – property will always give you back what you invest.
Why do you think people are going to the extent of relocating their head offices to Dubai?

Are property prices expected to fall anytime soon? If so, when?

I think property prices will fall towards the end of this year or the beginning of the next. But I see it as a challenge not a catastrophe.

What do you think about the property boom in the entire region?

Other places around the region have entered into the property market in a big way as well. Abu Dhabi, Qatar, Bahrain and Oman have a lot of potential but their marketing is not as strong as Dubai’s is – that is where they fall short, I believe. Dubai has marketed itself on a fantastic scale. It didn’t just open its shores to the rest of the world when it was still a non entity – it created an awarness about itself and then went on to open up completely. For instance, no reasonably educated person would say ‘where’s that?’ with regards to Dubai, but for the other countries that have recently joined the property market, that question wouldn’t come as surprise.

Are you planning any projects outside Dubai and the UAE?

Like I said, I’m not at liberty to discuss our future plans but yes places within the GCC like Bahrain, Qatar and Kuwait, and North Africa and the sub continent are all potential places that we are looking at with keen interest.||**||

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