Dubailand must be scaled down significantly: BMI
Mega project should be downsized to fit 'harsh realities' of RE market
A massive downsizing of the multi-billion dollar Dubailand project is needed to fit in with the "harsh realities" of Dubai's battered real estate market, according to Business Monitor International.
In a new report, BMI analysts said "a significant scaling down" of the $91bn project is needed if it is to become a reality.
BMI's analysis of Dubailand comes just days after Dubai Properties Group said it was in talks with developers to review their contracts as part of plans to get the project back on track by the year-end.
The mega-project was one of the most ambitious entertainment resorts planned for Dubai but was placed on hold in 2008 after the credit crunch saw the emirate’s real estate market collapse.
The development was originally slated to be twice the size of Walt Disney World Resort and boasted tie-ups with Universal Studios and Legoland.
The BMI report said: "While plans to re-launch the massive leisure project by year-end certainly send out positive signals about the recovering sentiment within the market, we believe serious thought (and downsizing) will be needed if the project is to fit in with the harsh realities of Dubai's subdued property market in 2011."
BMI added that it saw the decision to re-launch the landmark project as part of a "broader trend observable within among developers in the emirate".
"Sensing a marginal improvement in market sentiment and unwilling to write-off projects altogether; many developers are now pushing ahead with developments that have been stalled since the beginning of the crisis," BMI said.
"Such developments continue to flood a market that continues to suffer from significant over-supply, despite the Dubai Real Estate Regulatory Agency's decision to cut a large chunk of planned developments in the latter half of 2010.
"With this in mind and demand for new projects still weak, we believe a significant scaling down of Dubailand's ambitions is needed if it is to fit the economic realities facing Dubai in 2011."
Dubai had the world’s fastest-growing property market from 2006 to mid-2008 because of rising demand from a growing expatriate workforce and speculation fuelled by borrowing.
Prices quadrupled in the six years following the 2002 decision to allow foreign ownership of property in designated areas.
The global financial crisis sparked the collapse of the emirate’s property sector, wiping more than 60 percent off house prices and sending speculators fleeing from the market.
About 50 percent of Dubai real-estate projects were cancelled or suspended after the collapse.
Dubai Properties Group said earlier this week that it planned to unveil a revised masterplan for the mega-project later this year.