Few Dubai projects may physically disappear in 2009

[LahoreEstate]

Few projects in Dubai will physically disappear in 2009, as the emirate witnesses a flight to quality among investors, predicted the industry experts early this week.

The Chief Operating Officer at Gulf Housing Solutions, Christopher Sims, say that developers did not do adequate market research, and did not bother about who they were building the projects for.

"Although this natural culling of the market is a good sign, few projects will physically disappear. Few were very far-reaching and extremely ambitious. Therefore, amateurs are leaving the market, and professionals remain," Sims said.

Prior to the onset of financial downturn in Dubai, speculators and investors were just looking for a piece of the Dubai property cake. But, now, they are only considering those projects that are complete and have good quality finishes and amenities.

"It is not a recession, but, a technical correction. The market will move to a flight to quality - The Springs, Jumeirah. People will not live in the middle of the desert, without infrastructure." Sims pointed out.

Nakheel, for instance, had to postpone few of its projects such as the Trump International Hotel and Tower, and a kilometer-tall tower, and developers across Dubai and over the globe, had to tighten their purse strings.

According to the Regional Director at Jones Lang LaSalle, Ian Ohan, in terms of defaults, the projects that have not yet begun works, are best to resolve. The off-plan sales were effectively used to finance projects, and off-plan purchasers are now defaulting, putting the developer in a difficult situation.

A recent report by Jones Lang LaSalle states that more than 50 percent of its commercial and residential projects, due to come online between 2009 and 2012 are either on hold, or have been completely scrapped off.

A survey carried out during the third quarter of 2008 in the Middle East and North Africa region reveal that the major issue was that the investors were mostly concerned about their level of returns. Only less than 2.5 percent expressed keenness in an exit plan, and this indicates the state of the market back at the peak, Ohan explained.

However, the year 2009 will continue to be a year of correction, and 2010 will be a year of stabilization, before the market recovers in 2011, said Jones Lang LaSalle.

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