Outspoken MAG Group CEO Mohammed Nimer has seen what he believes to be the first green shoots of recovery in the Dubai construction industry.
Nimer, who oversees US $817 million (AED3 billion) worth of real estate projects, listed the narrowing gap between loans and deposits at banks, growth in bank lending in May for the first time since December 2008, and the stabilisation of oil prices as prominent green shoots.
Nimer also predicted what he termed a “square route shaped recovery,” which would indicate the industry achieving a level of sustained, long-term growth as opposed to following a second volatile boom-bust cycle which Nimer said “would be a disaster.”
“As always it will be the fundamentals that lead us to sustainable recovery,” said Nimer.
He went on to name the safe and secure communities, a tax-free environment and advanced infrastructure as the key fundamentals behind the city.
But concerns remain with population and unemployment, Nimer said, both of which are linked to the number of expatriates that will return after the summer break.
“We need to focus on demand creation for the future,” Emaar COO Naaman Atallah said last month at a meeting of the Dubai Property Society.
“Real estate depends on demand from other sectors of the economy. We need a plan to reverse the population decrease and go back to population growth in Dubai.”
For those that do return, many analysts agree that they will be met by more affordable housing.
According to Landmark Advisory, rental prices are coming down and the third quarter of this year will witness falls of up to 25% as more supply comes onto the market.
“I don’t subscribe to the view that people will upgrade their accommodation necessarily,” Nimer said, “but where I do see pent-up demand is from mid-management professionals who in the past have had to share accommodation. The size of that potential market must be considerable.”
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