Commentary
Colin Foreman
Editor
Dubai property is riding high again. On 14 August, Emaar Development reported its highest-ever property sales during the first nine months of 2022. Property sales from January to September this year increased by 11 per cent to $6.3bn, up from $5.7bn during the same period last year.
While the performance is positive, it should not be a major surprise. Emaar Development is the UAE-based build-to-sell property development business majority-owned by Emaar Properties. It listed on the Dubai Financial Market in 2017, when the city's property market was in the midst of an extended period of price declines that ended in late 2020, which made the sales environment for developers such as Emaar Development a challenging one.
The positive market sentiment in 2022 has given the banks comfort. In mid-November, Dubai-based developer Nakheel secured AED17bn ($4.6bn) in funding that the firm says will be utilised to accelerate the development of its new projects, including Dubai Islands and other large waterfront projects.
Securing finance before the end of this year could be a shrewd move. Unlike the 2003-08 Dubai real estate boom, when few considered the prospect of a market correction, today the market is aware that prices are unlikely to rise forever.
The spike in interest rates could burst the bubble. Bankers are concerned that recent rate hikes could severely curtail off-plan sales, which will deprive developers of an important source of finance for their projects – especially if the focus shifts to building assets that produce recurring revenue.
If those fears are realised, then developers that have already secured their funding will be better placed to continue building than those left to the mercy of the off-plan market.
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