Dubai’s property market is bottoming out as buyers return to the market and the emirate offers an alternative to investors worried about the U.K.’s Brexit vote, according to Nakheel PJSC Chairman Ali Rashid Lootah.
“I think the worst is over,” he said, according to Bloomberg. “Dubai is growing, we are seeing signs of more inquiries – serious inquiries – and I think that’s a sign of recovery. The market is maturing, we are seeing more serious, cautious investors, not speculators.”
Real estate sales in the emirate fell almost 30 percent by value in the first seven months of the year, according to data from the Dubai Land Department, as a slump in oil prices led to an economic slowdown in Gulf countries. Real estate analysts see either a flat market or a further slowdown in 2017 with Jesse Downs, managing director at real estate consultant Phidar Advisory predicting a 10 percent drop in values after a 7 percent slide this year.
Lootah is visiting Singapore to market Nakheel’s Palm 360 and Palm Tower projects to overseas investors. About half of the 504 apartments in the 52-story hotel and residential Palm Tower have been sold since they went on sale two years ago. The building’s first 18 floors will be a luxury hotel operated under the St. Regis brand.
Since Dubai’s 2008 property collapse forced state-controlled Nakheel to restructure debt, the company has rebounded from losses by boosting recurring revenue from hotels and retail outlets as well as developments on its Palm Jumeirah island and other projects. The developer reached the goals in its business plan two years ahead of schedule and became debt-free in August, he said.
“This was a nice chapter to close, it was not easy to operate under restructuring conditions, especially when we had to deal with more than 30 banks,” Lootah said. The company is planning to almost quadruple the size of its recurring income portfolio to $2 billion over the next five years. It also plans to expand its retail business to 17 million square feet (1.6 million square meters) by 2020 from 4 million square feet currently, he said.
The Palm 360 project, a twin-tower hotel and residential development will start sales in the first quarter of 2017, Lootah said. It will also house two 55-room boutique hotels in each tower, he said. The project will include 252 high-end serviced apartments and six duplexes.
Nakheel’s largest share of buyers are from the Gulf Cooperation Council countries that include Saudi Arabia, Kuwait and Qatar. The next largest group is Indians followed by the British. Investors looking for alternatives to U.K. property following the nation’s referendum to exit the European Union may consider Dubai, Lootah said.
“Brexit could be a positive thing,” Lootah said. “People looking for the best return on their investment will have to pick and choose and may look for other opportunities. Because of Dubai and U.A.E relations with U.K., we are an obvious alternative”