Hussain Sajwani
By Zainab Fattah and Yousef Gamal El-DinDamac’s chairman is the latest executive to call for curbs on construction in a market that’s been on a downward trajectory since it peaked five years ago. The slump has defied all predictions of a rebound as house prices fell around 30%. About 30,000 new homes will be built this year, twice the demand in the Gulf city, property broker JLL estimates.
“All we need is just to freeze the supply,” Sajwani said. “Reduce it for a year, maybe 18 months, maybe 2 years,” he said.
Bank Risks
Sajwani warned that ignoring the oversupply could spell trouble for the city’s banks. The declining value of homes would inevitably lead to growing bad loans and higher provisions against default, hitting profitability. Dubai has recently created a committee to limit supply and ensure that private developers operate in fair environment.
Sajwani pointed at his competitor Emaar Properties PJSC as the main culprit in the oversupply and said the company offers payment plans that encourage speculation. The majority of other big developers, including Meraas Holding LLC and Nakheel PJSC, have halted new construction or cut it back by about 80%, while Emaar continues to “dump” properties on the market, he said.
Emaar, which built the world’s tallest tower in Dubai, declined to comment.
Emaar’s website shows a long list of its latest developments, including Arabian Ranches III, Dubai Creek Harbour and Emaar South. The developer has also joined forces with divisions of state-owned builders. Dubai’s government owns about 29% of Emaar.
— With assistance by Giovanni Prati
