Dubai takes on property market glut in ‘big way’ but has yet to deliver

An aerial view of the Sheikh Zayed Road in Dubai (file). In 2022, 36,000 homes will be finished in Dubai, according to a conservative estimate by real estate consultancy Core, not much of a change from last year’s 37,000 completions.

Dubai is finally choking off the glut of properties that’s plagued the market for years, according to one of the city’s top builders, though numbers hardly show it.A government committee set up before the pandemic enlisted some of Dubai’s largest developers as members to try to manage supply and demand in the property market and ensure that state-owned businesses don’t crowd out private builders. Little clarity has emerged since then on how it will deliver results.But in a rare glimpse into the panel’s inner workings, Farhad Azizi, chief executive officer of Azizi Developments, said its efforts have focused on making it more expensive for developers to launch new projects.“That committee has brought changes in a big way,” he said in an interview. “They have made it more difficult for anybody to just become a developer.”The determination has yet to put the brakes on an industry that saw a surprising turnaround during the pandemic, in part by attracting buyers fleeing virus lockdowns abroad. Still, a pile-up of properties means values could moderate already this year.In 2022, 36,000 homes will be finished in Dubai, according to a conservative estimate by real estate consultancy Core – not much of a change from last year’s 37,000 completions.Behind the scenes, Dubai appears to be turning the screws. The government committee now requires developers to adhere to specific delivery dates or face penalties when they fall behind, according to Azizi.Companies currently also need to complete 50% of the construction process before they could tap into their escrow accounts, compared with 20% before the committee was set up, he said.“That automatically controls the supply,” Azizi said. “So it has been managed better.”In Dubai, property prices fell by more than a third since 2014 before a rebound in demand translated into record sales. Residential prices rose about 10% in 2021 on average, driven by an uptick in single-family homes, as people worked remotely during the pandemic and sought out bigger houses, according to Core.The Middle East’s business hub still remains a relative bargain, leaving it “at least five times cheaper than London,” Azizi said.Prices are stabilising slowly in the emirate but “I don’t expect them to have a sudden hike up unless a big event happens,” he said. “Dubai is still a buyer’s market.”His company wants to expand operations in Germany, England and Canada, and has already started looking at locations to set up base. The developer will likely open an office in one of those countries by the end of the year, Azizi said.It’s recently seen an increase in demand by buyers from European countries including France, Spain and Russia.The company doesn’t intend on going public for now as that has become “less of a financial priority,” according to the CEO. But it could still revive sukuk issuance plans by the end of the year.“We are already in talks to identify the best plot of land for our next master-planned community project,” he said. “Once we do, we will pursue sukuk to help us.”