The desert gave Dubai an easy excuse to keep building.
Sprawling for miles in every direction from the dueling skyscrapers on the coast, villa communities have sprung up across the sandy interior, bringing with them schools, hospitals and shopping malls. Where the dunes once spilled into the Persian Gulf, an eight-lane highway now connects the new developments with the established neighborhoods.
But five years into Dubai’s property funk, the emirate’s leadership is drawing the line.
Work on a mega-airport, designed to be one of the world’s biggest, was put on hold. And in the most dramatic U-turn yet, Dubai’s ruler has created a committee, headed by his son, to balance out supply and demand in the property market and ensure that state-owned developers don’t crowd out private builders.Some developers are already holding off on planned projects. Two of Dubai’s homegrown billionaires are now calling for a pause to new development. Khalaf Al Habtoor, who once added 1,600 hotel rooms to the city through one project, said the market is saturated.
“If this oversupply continues it will be a disaster,” Hussain Sajwani, chairman of Damac Properties PJSC, said in an interview. “The banking system will get affected and that’s something we can’t afford.”
Blame Game
Much of the property glut is of the government’s own making, since it controls some of the emirate’s biggest developers. The state-linked firms, created to speed up construction, used cheap and often free land to compete for buyers. Some paid upfront without waiting for homes to be completed by depositing only 5% of the value.
And excessively optimistic projections of growth in Dubai’s population, which consists largely of foreigners, only fed the building boom.....READ MORE
