Dubai will pick up in 2016: Bin Kalban
Dubai - Bin Kalban said the current slowdown in the real estate market was natural.
Union Properties reported disappointing numbers for the first two quarters of 2015. However, investors can cheer up. Khalid bin Kalban, chairman of the company, has predicted a net profit in the range of Dh400 million to Dh450 million for the whole year.
"For the third quarter, we project a rough net profit of Dh100 million-plus. For the first nine months of the year, it will be in the range of Dh155 million. These figures will be subject to audits and confirmation from the board," said bin Kalban.
"We turned the corner three years ago. I challenge anyone who says that UP has not done well since the new board took over. How many times has UP made more than Dh600 million [in annual profits] since 1993 when the IPO took place? Even during the financial crisis and the company had to deal with billions of dirhams in debt, we went about our business. Last year, we paid out a cash dividend," the chairman said.
Bin Kalban said the current slowdown in the real estate market was natural. "After three years of high growth, a correction phase had to come. The Dubai market will pick up from mid-2016 onwards and the momentum will last until 2020," he said.
"But the number of projects will not be as high as announced owing to limited contractor capacity in Dubai," said bin Kalban. "The local construction sector will utilise most of its capacity to handle government-related projects for Expo 2020. They will not have resources for the private sector."
The chairman said banks are now loathe to lend to the real estate market. "Developers are substituting banks and taking on a lot of risk on behalf of investors by offering ridiculous payment plans. Liquidity is stuck in the system. This is also reflecting in the financial market," he informed.
"Hopefully, there will be a return of liquidity in 2016. Banks may finally have to change their stance of not lending to real estate," he said.
Bin Kalban said the Dubai market has shifted focus to affordable housing. "The ultra luxury market has softened. But the mid-low to mid-high market is still growing. Although the number of transactions has increased in Dubai, their total value has decreased," he added.