Real estate sector in Dubai is booming again and the trend is expected to continue throughout the year, but it’s not good for small and medium enterprises (SMEs) as it impacts negatively directly or indirectly, according to industry specialists.
“Bubble chances are significantly less at this time,” Alan Robertson, chief executive officer of Jones Lang LaSalle (JLL) for the Middle East and North Africa, said during a panel discussion at SME World 2014 in Dubai.
The panel members shed lights on the topic: ‘Dubai’s real estate sector and its effect on SMEs’ with key themes — real estate as a critical input for SMEs, the challenge of access to land and growth prospect for SMEs, soaring real estate prices in Dubai and their implications on SME sustainability.
Dubai’s real estate prices surged more than 30 per cent last year with further growth expected to come, according to a recent report by global real estate firm JLL.
Giving examples of measures taken by the UAE Central Bank and Dubai government, Robertson said these steps made it less attractive for short-sellers. He mentioned that rent is rising but as far as businesses are concerned the level of price increase has been much lesser.
“Great thing about Dubai is that there is very substantial supply.
“In our view real estate market is growing in every sector and it will continue foreseeable future. Expo 2020 is further advantage to Dubai,” he explained.
Building material suppliers know the true and inside picture of real estate market as they feel the impact very quickly in both scenario either its booming or burst.
Danube Building Material chairman Rizwan Sajan, giving insight during the panel discussion said that it’s back on track.
“Dubai has overcome the global financial crisis impact on real estate market during a record time. There is a lot of possessiveness as so many companies restarted stalled projects. We are back as building material companies in the next 5-6 years will be in the same growth path,” Sajan explained.
Responding a question, he said: “The biggest mistake we do when we put all money in real estate. So my advise to SMEs is that they should keep some capital for running the business instead of putting all cash into property.”
Ahmad Anani, partner at Latham and Watkins, said: “I think prices are going to go up and rising prices affects SMEs.” Anani appreciated the Dubai Land Department’s initiative to double property registration fees, but said property prices jumped by 30 per cent last year.
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