For developers, it is vital to align their strategies to the long-term aspirations of the city.
Dubai’s real estate sector has all the ingredients in place to drive its growth in the coming years due to timely measures introduced by the government to offset the impact of a slowdown in the global economy, a top industry executive said.
Ali Sajwani, general manager for operations at Damac Properties, said the sector will benefit from a mix of activities like the upcoming Expo 2020 Dubai, pro-investment government initiatives and the city’s long-held reputation as a preferred investment destination.
“For developers, it is vital to align their strategies to the long-term aspirations of the city. We need to build for the future, and that takes a deep understanding of what customers and investors are looking for,” Sajwani told Khaleej Times in an interview.
The 27-year old scion has been deeply involved in the family business from a young age and currently leads a number of internal working groups at Damac, which oversee international developments, Damac Maison Hotels & Resorts, as well as quality audit and quality control.
Present state of property
Sajwani said the best way to summarise the state of Dubai’s real estate sector is that the industry is maturing. Considering the cyclical nature of the industry, the correction in prices has further amplified the market’s appeal to investors with more than half the real estate transactions in the first five months of 2019 coming from new investors.
He said the optimism around an expected uptick in real estate has prompted many investors to enter the market. Moreover, with the government’s efforts to transform Dubai into a long-term destination for residents, many end-users are finding this to be the right time to make their dream of owning a home in Dubai a reality.
“We can already see solid signs of recovery as property prices in certain areas start picking up. The market remains favourable for buyers, and this year, residential transactions reached a four-year high during the summer season. With the countdown to Expo 2020 Dubai beginning in October, we are very optimistic about the industry’s growth in the coming few years,” the young entrepreneur said.
Expo 2020 impact
To a question, he said Expo 2020 has already helped in furthering Dubai’s presence as a word-class global city. With over 20 million visitors expected to come to Dubai by 2020, the Expo is expected to provide a significant boost to the various sectors including the hospitality sector.
“As we draw closer to the event, and with progressive government intervention and reforms, we are already seeing a significant increase in foreign interest and investments. We hope that the positive impact of the event will be felt across all sectors of the economy,” he said.
Sajwani, an entrepreneur with a diversified portfolio, said the market is oversupplied for the moment, but “we must remember that we are approaching the end of a softer real estate market cycle”, and the market is witnessing a lot of encouraging activity.
“What the industry should now focus on is creating the right kind of supply that is aligned with what investors and buyers are looking for. The city saw a sharp increase in real estate transactions and investments in the first five months of 2019 driven by competitive product offering and positive initiatives by the government such as the introduction of long-term visas for professionals and investors,” he said.
“In the first half of 2019, Dubai registered a 135 per cent growth in FDI, which is a sure sign of great things to come. We are going to see more jobs and a greater influx of people entering the city, which will hopefully lead to an increase in demand for real estate,” he added.
To a question, Sajwani said the establishment of the Higher Committee for Real Estate is also a positive move that will encourage investor confidence.
“The committee will play a key role in creating balance in the supply coming into the market and in setting an agenda for the long-term growth of the sector. The development of a strategic plan for upcoming projects will help align the industry to Dubai’s long-term objectives. He said the initiative will boost investors’ confidence and pave the road ahead for Dubai’s real estate sector. The impact of the Higher Committee can already be seen with Dubai witnessing a 134 per cent rise in sales transactions within days of the committee’s establishment, he said.
About the new Dubai law for joint real estate ownership, he said the new regulation that has been issued to regulate the joint ownership of real estate in Dubai will add to the reputation of transparency that Dubai’s real estate sector is well known for, and it will ensure the rights of all parties and serve as a significant boost for investors’ confidence.
40K units in pipeline
Sajwani says 2019 has been a busy year for Damac with the commencement of handovers of key projects such as Ghalia – its first Shariah-compliant development – and the Claret cluster at Akoya.
“We have handed over close to 1,500 units this year and awarded contracts worth nearly Dh500 million in the first half of the year for the completion of key projects,” he said.
“Earlier this year, we also launched Zada, our luxury residential project overlooking Dubai Water Canal in Business Bay.”
So far, Damac has delivered close to 26,000 units since its inception in 2002. “We have close to 40,000 units across residential and hospitality projects that are in various stages of the development, and our focus will continue to be on execution. We are also always on the lookout for lucrative opportunities in local and global markets,” he said.
To a question about raising funds through bonds or sukuk, he said Damac has always focused on maintaining liquidity and cash flow.
“Right now, we are focused on keeping our pace of deliveries and paying down debt. The requirement of raising funds through sukuk or bonds are evaluated by our team of financial experts and acted upon accordingly,” he said.