Alabbar sees 'challenging' Dubai homes market to 2014

Emaar Properties chairman Mohamed Alabbar has said Dubai's real estate will remain a "challenging" environment for two or three years but house prices are beginning to recover. He also said he saw "optimism in the city" and confidence among consumers and the government, resulting in growth in key sectors of Dubai's economy. He said in an interview on Bloomberg TV that tourism was experiencing strong growth while spending this year was up, adding that "things were looking good" for the emirate. He conceded that challenges remained in the real estate market but said that he was confident the sector would "work through the next two or three years" when oversupply is likely to weigh on recovery. Speaking in London, the high-profile UAE businessman said Dubai's property market had been in the doldrums for three years but consumers and contractors had adjusted to the new global economic realities. "Frankly, I think prices have stabilised and in certain pockets of the city, they are moving upwards gradually so it is all good news," he said. Analysts remain concerned that the estimated 33,000 new homes scheduled to hit Dubai’s market by end-2012 could cause fresh declines in rental and sale prices. Rating agency Moody's said last month that house prices are unlikely to recover until 2016. Home prices in Dubai, the Gulf property market that had the biggest reversal because of the financial crisis, fell more than 60 percent in the wake of the global credit crunch. But Alabbar insisted Dubai "is and would remain" a majority of Emaar Properties' income because of its "growth rate and government policies". House prices in Dubai showed signs of recovery in the third quarter, with slight rises in prime projects such as Palm Jumeirah and Arabian Ranches, Jones Lang LaSalle said in September. On the future of Emaar, Alabbar said he was looking "seriously" at Africa and Asia for expansion. Operating in 17 countries mostly in the Middle East and India, he added that he believed the company could still see strong growth in developing markets. Last month, Emaar Properties reported a 34 percent drop in third-quarter net profit. The UAE's largest developer by market value, which is the builder of the Burj Khalifa, the world's tallest tower, made a profit of AED406m ($110.5m), compared with AED612.3m during the same period last year. The developer, whose profits have dropped for the last five quarters, said it made a revenue of AED1.86bn in the third quarter. Alabbar also told Bloomberg's Francine Lacqua that he was also working on creating a "mega downtown project" in a country but could not give any further details. And he hinted that he would be interested in projects in Kabul, Afghanistan once stability has returned to the country. He said Dubai remained a "paradise of hope" in the Middle East region which has experienced difficult times recently in the likes of Libya and Iraq. He insisted that key sectors of Dubai's economy - including the finance centre of DIFC, technology, media - and its trade with Africa and India, described by Alabbar as "our China" were all growing at an "incredible rate".