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Less Pizzazz, More Sober Expectations

DUBAI — Cityscape Dubai 2009, which opens today for its eighth year, is more than the nation’s biggest trade fair for the property industry.

The four-day show also offers the most complete view so far of conditions in Dubai’s battered property sector, since the financial crisis led to a crippling recession. The exhibition is a one-of-a-kind bellwether for the local economy in the wake of its most difficult year.

Organisers of the show at the Dubai International Convention and Exhibition Centre acknowledge that its 210 exhibitors occupy a third less floor space than the fair’s exhibition stands did last October. Cityscape also is likely to attract 20 per cent fewer visitors this time, or a total of about 54,000 people, they estimate.

This paring down should come as no surprise, given the bursting of Dubai’s real estate asset bubble and the resulting plunge by as much as half in the emirate’s property prices from last year’s peak.

“However, the high quality of Cityscape Dubai as the industry’s main networking event is well maintained. The major institutional investors, master developers, high-net-worth individuals and senior real estate professionals, which are the backbone of Cityscape, will be in attendance,” said Rohan Marwaha, the fair’s managing director.

“Cityscape Dubai is still a very large show, by any standard.”

Its organisers expect few announcements of major new projects, unlike in years past. Instead, the emphasis of exhibitors will be on transparency and updates on the status of existing projects and on the delivery to customers of finished buildings and residences.

“You will have major milestones,” said Cityscape spokeswoman Nathalie Visele. “It’s still a platform 
for the industry.”

The industry, accustomed for years to serial groundbreakings of ever more extravagant projects, is groping now for the market’s bottom. In an updated analysis released on the eve of the show, Landmark Advisory, a Dubai-based property consultancy, said on Sunday that the emirate’s residential property market “has effectively regressed back to 2006 price levels.”

Sales prices for apartments fell by 3 per cent in the third quarter from the second quarter, and they are down by 38 per cent from last year’s apex. Villa prices increased by 8 per cent but are still 39 per cent lower than peak levels, Landmark said.

Apartment prices are likely to fall further but start to stabilise late next year. Average villa prices would remain stable in the current fourth quarter and gradually increase in 2010, it forecast.

In the rental market, Dubai apartment rents fell by 17 per cent in the third quarter compared to the second, while average villa rents rose by six per cent over the same period. Landmark forecast that villa rents would probably stabilise in the fourth quarter. Apartment rents are likely to keep falling, however, due to excess supply, it said.

Dubai’s office market continued to suffer from weak demand in the third quarter, with sales prices falling by 10 per cent from the previous quarter. Dubai office prices are now at mid-2006 levels, after tumbling by 48 per cent from their highs. “Where demand does exist, it almost exclusively favours smaller offices,” the firm said.

Landmark added that Dubai’s existing office oversupply would probably increase “dramatically” over the next 18 to 24 months.

In one example of the more modest aspirations at Cityscape this year, Dubai Investments Real Estate Company, or DIRC, will “showcase” the second phase of its Ritaj project, a 598-unit residential complex in Dubai Investments Park. Ritaj epitomises the concept of “affordable luxury,” said DIRC, the real estate arm of Dubai Investments PJSC, in a nod to the more cautious mood of buyers this year.

“We believe targeted trade shows such as Cityscape Dubai can play a vital role in reinvigorating the property market,” said Obaid Al Salami, General Manager of Dubai Investments Real
Estate Company.

“We… are confident we can leverage the reputation of DIRC and the goodwill generated by the success of ‘Ritaj’-Phase 1 to elicit good investor response for the second phase of the project,” he said on Sunday in a statement.

Similarly, Deyaar Development, a major developer in the emirate, highlighted that 64 per cent of the construction was now complete on its Central Park project at the Dubai International Financial Centre. Central Park is a Dh4 billion joint-venture between Deyaar and Dubai Properties Group, a member of Dubai Holding. The project includes a 47-storey residential tower and a 45-storey
 office tower.

Dubai Sports City, meanwhile, “has made steady progress during the past year... and is looking forward to an even busier 2010, with more deliveries and major events in the pipeline,” the company said in a statement.

So far this year, the $4 billion integrated complex of sports facilities and schools has inaugurated a golf school and a cricket stadium, delivered a first phase of villas and opened a school.

“Today, we are seeing residents moving in, children coming to school everyday, golfers playing their rounds, and major events taking place at our facilities,” said Dubai Sports City President Khalid Al Zarooni.


bruce@khaleejtimes.com