- Property prices fall by 2 per cent in first quarter
- Sheikh Mohammed approves new rail and real estate projects in April
- Dubai is preparing to host world Expo in 2020
Dubai is busy driving ahead with new projects despite weakness in the emirates property sector.
Residential prices dropped by 2 per cent during first quarter of 2015, according to a report published by US-based real estate consultancy CBRE, with the firm predicting that the delivery of a large quantity of new units in 2015 will continue to depress market rates.
Another US-based consultancy also expects prices to fall further in 2015 with JLL expecting declines of 10 per cent during the year as an additional 22,000 units are expected to enter the market by the end of the year although some deliveries may be delayed.
Real estate development was a key driver of Dubais economic recovery after the global financial crisis and debt repayment problems in 2009, but since then thousands of new units have been built and delivered together with old legacy projects that have been restarted and completed.
With softening property prices opportunities for Dubais construction sector will change as the focus for developers moves from residential property to hospitality, retail and commercial buildings while the government develops new infrastructure.
UAE vice president, prime minister and Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum has taken an active role in keeping the market moving and has approved a wide range of new projects since early April.
The largest new infrastructure project he has endorsed is the new rail link serving the Expo site in the Jebel Ali area. Known as Route 2020, the scheme will be tendered in July and involves building a 15-kilometre-long line branching off the existing Red Line at Nakheel Harbour and Tower station close between Ibn Battuta Mall and Jumeirah Lake Towers stations. About 11km of the line will be elevated, with five elevated stations and two underground stations.
Dubais Roads & Transport Authority (RTA) has invited firms to express interest by 30 April in working on the new metro link connecting to the Dubai Expo 2020 site. In January, MEED reported that the RTA is preparing to tender the contract in July after expressions of interest (EoIs) are sought from contractors. Suppliers and contractors have already been in contact with the RTA.
Japans Mitsubishi is expected to be a strong contender for the project, as it built the first two lines of the Dubai Metro network in a consortium with two other Japanese companies, Obayashi Corporation and Kajima Corporation, and Turkeys Yapi Merkezi.
In July 2014, the RTA awarded a joint venture of the US Parsons International and Frances Systra the contract to complete the preliminary engineering for the new metro line. Work on the study began in August.
Sheikh Mohammed has also approved real estate projects. In early April he visited Nakheel, which has been one of the most active clients for construction companies since the Dubai property market began to rebound in 2011, and gave the go ahead for new projects with a combined built up area of over 2.1 million square metres. Tender for the projects is expected to start by the end of April.
The new projects are a 600,000 square metre residential, retail and hotel extension for Dragon Mart that includes two new towers; a new, 450,000 square metre complex at Ibn Battuta Mall that includes 100,000 square metres of mall space, a new cinema complex, multi-storey car park, hotel and glass-covered courtyard; and a 1.2 million square metre, 16-tower community at Deira Islands together with a 490,000 square metre mall.
Earlier in the year Sheikh Mohammed approved other projects planned by Wasl, inlcuding a new tower on Sheikh Zayed road known as Al-Wasl Tower, a mixed use development known as Creek Heights Residences that comprises two towers including a Hyatt Regency hotel, and Dubai Gate, which will be built near to the metro station in Jebel Ali.
In 2014 Sheikh Mohammed endorsed Dubais largest infrastructure project, the expansion of Al-Maktoum International airport. It involves $32bn-worth of investment and building, in two stages, an airport with ultimate capacity to handle about 250 million passengers a year.