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Dubai ruler calls for new real estate strategy, as house prices continue to tumble

Dubai's economy is hugely reliant on real estate [Getty]

Date of publication: 3 September, 2019

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House prices in Dubai have sunk to the lowest levels since 2008, according to report.
Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum has issued a statement calling for a new real estate strategy, as house prices in the emirate tumble to their lowest levels in over a decade, according to one report.

Sheikh Mohammed called on construction companies to "adjust their pace" with real estate projects in Dubai and add more value to the national economy via his Twitter page.

Entitled "The Letter of the New Season", the statement outlines six objectives for Dubai's real estate sector - a key part of the emirate's economy.

Among them is orders for construction to "adjust" its pace and establish better-thought our real estate projects.

"Economic figures are in progress, our competitiveness is improving and our foreign trade is increasing. However, we are not moving according to the average economic rates," Sheikh Mohammed wrote over the weekend.

"We are a country seeking to make economic leaps that save. In the coming period, we need to do quality projects and exceptional ideas to advance our economy forward."

He also said real estate projects should not be a "burden" and "a source of imbalance" for the country, according to Construction Weekly.

Sheikh Mohammed, who also serves as UAE prime minister, followed up with a tweet on Monday establishing a Higher Real Estate Planning Committee to look into the issue, which will include government officials and leading private and semi-private sector figures.

"We instructed Sheikh Maktoum to ensure that semi-government real estate companies do not compete with private investors and to develop a comprehensive strategic plan and vision for all major real estate projects in the emirate for the next ten years," the tweet from Sheikh Mohammed's account read.

The committee will work towards ensuring that real estate projects are not duplicated and to minimise competition between small and large developers, according to Gulf News.

Sheikh Mohammed also warned people against "stirring chaos" on social media.

Although it was not clear whether this was an order slow down or speed up the pace of construction, it comes amid a report of tumbling house prices in Dubai.

UAE-based property consultancy Cavendish Maxwell issued a report saying that prices have dropped 15.3 percent year-on-year as of June this year, Asia Times reported on Tuesday.

"As of June 2019, apartment and villa/townhouse prices have declined by 21.4 percent and 22.4 percent respectively, compared to their prices of AED 2.1 million ($570,000) and AED 5.6 million ($1.51 million) in September 2015," Cavendish Maxwell said.

The price of a villa in Dubai has also sunk from AED 2.93 million ($800,000) in 2014 to AED 1.68 ($460,000) in July 2019.

Low oil prices and other factors have contributed to slowing of the economies of the UAE and other Gulf states, which have been reliant on outside investment.

The report stated that house prices were now at their lowest in over a decade, when in 2010 the emirate was hit by an economic crisis caused by a crash in the real estate sector.

Dubai was given a boost with higher oil prices and in 2013 were given the hosting rights for Expo 2020, reinvigorating real estate in the city but the boom was short lived.

Unlike much of the Gulf, Dubai has little natural resources and its economy is reliant on tourism, real estate, banking and services.

Another worrying sign for the emirate were reports that construction on the planned Al-Maktoum Airport - which was touted as a regional air hub and base for Dubai's carrier Emirates - has been put on hold.

Completion of phase 1 of the airport had already been pushed back five years to 2030.

Dubai Airports responded to the Bloomberg report saying that planned expansion was of the airport was being reviewed.

"Dubai Airports is currently reviewing its long-term master plan," a statement issued to Bloomberg from Dubai Airports said.

"The exact timelines and details of next steps are not as yet finalised."

On Monday, Sheikh Mohammed also issued a warning against anyone "stirring" trouble on social media.

"Messing around and stirring up chaos on social media waste achievements for which thousands of teams worked so hard to realise. The reputation of the UAE is a red line and not to be used by anyone who wants to get more followers," he tweeted.

"We will not allow a group of Twitter users to mess with Zayed's legacy of credibility, love and respect for people. The good image of the UAE and the Emirati must remain as bright as Zayed wanted and built."

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