The global economic crisis will benefit the Gulf by putting the brakes on an out-of-control development boom, according to Abdul Wahed Al Kooheji, the CEO of Bahraini developer Swiss Attix.
“We are lucky for what happened because we needed something to slow down this crazy market,” he said. “It was way ahead of itself and didn’t know when to stop. In a couple of years the problem would have been much bigger.”
Kooheji said investors are now showing caution in Bahrain but expects confidence in the market to return within the next six months.
He said the slow-down will prevent Bahrain from following Dubai’s development boom, which he deemed unrealistic and unsustainable in the long term.
“It’s a wake-up call for Dubai which at the end of the day is a dustbowl with no culture and I don’t understand why you would pay New York prices,” he said.
“They have nothing to offer, hundreds of tall buildings is not a country.
“They are trying to create demand that isn’t there – they have 80 five-star hotels under construction – I mean come on, this is the real world.”
The CEO of Dubai-based developer Shaikh Holdings, Imran Shaikh, was less scathing but also believes positives can be found in the economic crisis.
He expects the market to stabilize as short term investors and developers exit and real estate prices drop between 10-15% over the next six months.
“It’s needed in this market because it was growing at such a rapid rate that was just not healthy,” Shaikh said.
“I think greater regulation by the Government is also very positive as far as developers go.
“These factors should squeeze out developers with short term vision that aren’t well managed or well capitalized which is a good thing.”
Shaikh Holdings is the developer behind the US $235 million Sanctuary Falls project within the Jumeirah Golf Estates. They also have towers planned for Business Bay and the Dubai Waterfront.
Swiss Attix is to start construction this month on their first project in Bahrain, the $327 million 360 degrees tower in Juffair.