It is now nearly three years since Dubai property prices were first reported to have declined and the impact can still be felt today. The November 2008 property data shattered the perception that real-estate prices in Dubai and the rest of the GCC only go one way: up.
Today, statements from overly bullish buyers such as “I bought because at the end of the day prices won’t go down”, appear foolhardy and reckless, but back then they reflected the sentiment of a market that believed it could support five $20bn-plus projects in just one city of 1.5 million people.
In 2011, that sentiment has been reversed. Few expect that the majority of the GCC’s large-scale real-estate schemes will ever be built. As the global economy moves closer towards a dreaded double-dip, the expectation of failure is growing every time more jobs data is released from the US, or a sovereign downgrade is made in Europe.
“Nine multibillion-dollar real-estate projects have fallen off the MEED Projects Top 100 rankings”
This year, nine multibillion-dollar real-estate projects have fallen off the MEED Projects Top 100 rankings. With the exception of Oman, the nine projects came from all six GCC states, proving that nowhere is a safe haven when it comes to real estate. To make matters worse, many of the real-estate schemes that are still ongoing and remain in the Top 100 are moving slowly as developers struggle with cash flow in the absence of new investment. New contracts are slow to be awarded and existing work is being downsized and there is a lack of interest from investors for real estate across the region.
What does vary across the GCC is the level of support each of the region’s governments can give to their projects market.
With oil prices at more than $100 a barrel, the hydrocarbon-rich governments of Saudi Arabia, Kuwait, Qatar and Abu Dhabi can afford to keep the projects market moving with state-backed infrastructure schemes. In the coming years, they will replace more real-estate projects in the Top 100.