Luxury Property in Dubai expected to see Price Correction

High end luxury property values in Dubai are likely to see the largest fall in prices during the expected correction says mid-range property specialist, Mohammed Nimer

"People buying mid-range apartments are doing so mostly to live in them as homes rather than looking for short-term gains," says Mohammed Nimer, CEO of MAG Group Property Development

If a correction in the United Arab Emirates real estate market is imminent, it will be high-end property values that suffer most rather than mid-range, according to a leading property developer. Most of the recently introduced laws in Dubai are aimed at curbing the short-term speculators, and much of the price increases over the last several years have been driven by the top end of the market.

With increasing warnings of a downside correction, particularly in Dubai’s overheating real estate market, it has been the luxury properties – which were and still are more attractive to speculators – that will be hardest hit, says Mohammed Nimer, CEO of MAG Group Property Development.

“In comparison, the mid-range market will be more stable if and when the downturn comes, as people buying mid-range apartments are owner-occupiers, doing so in the main to live in them as homes rather than looking for short-term gains,” he added.

Nimer recently predicted the Dubai construction boom would peak in early 2009, with $3 billion worth of real estate either on the drawing board or under construction. From that point, he believes the market will fall back to 2007 levels, subduing rising prices.

A clearer view of the outlook for the real estate market is expected to begin emerging during the Cityscape Dubai property show early next month. “Meanwhile, from our perspective, developing and marketing property in the mid-range sector, we remain confident that demand from owner-occupiers will keep market prices stable,” Nimer added. “Issues of liquidity in the financial sector will have a bearing, but again we see this as limited compared with top end luxury developments.”

Nimer was speaking as MAG Group Property Development, which specialises in competitively priced buildings in the mid-range market, prepares for participation at Cityscape Dubai (6-9 October 2008 at the Dubai International Exhibition and Convention Centre) at which current residential tower projects will feature.

They include: MAG 218, which is 90% sold and due for completion at the end of 2009; MAG 226, 50% sold and due for completion at the end of 2010; MAG 228B, 40% sold and due for completion in the first quarter of 2010; and Matex, which is 85% sold with a completion date to be announced.

The MAG Group sees itself a regional industry leader in establishing firm business ethics embracing sustainability and communicating transparently. “We also insure that anyone who purchases one of our properties is a safe investment,” Nimer said. “Quite simply, that means that the finance on any of our individual buildings is completely covered before we announce the project and seek buyers.

“Unlike some, we don’t make grandiose claims about being the highest, biggest or the most expensive,” he added. “We recognise that what people are looking for is affordability, quality and a pleasant home to live in and bring up their families.”

MAG group

This is not the first developer to predict a drop in prices in Dubai. You are invited to discuss this in the Luxury Property Forums.