Property Mogul optimistic about future of Dubai real estate
Recently while writing about the state of Dubai’s property market, I observed as others have done that about 90 per cent of all property developments that occur in Dubai are carried out by four state owned companies. Furthermore, the scale of the projects which these businesses have backed are enormous. For example “Dubai World Central” is one major project that the state has invested heavily in, an airport that is due to be complete in eight years. Estimated to cost somewhere in the region of $32.7 billion, it will be larger than Heathrow and Chicago’s O’Hare Airport combined. Another project known as “Mall of the World” is worth $6.8 billion.
Given the scale of these projects, it is to be expected that the remaining 10 percent of the market would be hotly contested by private developers. Despite the IMF downgrading its forecast for growth in the Gulf region, seasoned private property investors such as Safi Qurashi are solidly optimistic regarding the future of their current developments. This is despite Mr. Qurashi suffering greatly from the property crash in 2009 which saw several government linked property businesses unable to make repayments on their debts, causing a collapse in property prices.
Mr. Qurashi describes the property boom during the years preceding 2009 as a “gold rush”, not surprising when one considers that he went from selling his first Dubai apartment four years previously, to doing $1 billion worth of sales at the height of the bonanza.
However, boom turned to bust and house prices halved. Private investors were hit hard, with assets becoming worthless practically overnight. Mr. Qurashi, a south Londoner, went from property mogul to behind bars in January 2010 as a result of a bounced cheque, which is illegal in Dubai. Mr Qurashi was eventually acquitted and released in July 2012 and is now in the process of building up a new property business. Such confidence in the future of Dubai’s property market is impressive, particularly from someone who obviously suffered so personally as a consequence of general over optimism in Dubai’s property market in the recent past
That being said, a diversification of the local economy and increased regulation of Dubai’s real estate market may have put the future growth in property prices on a sounder footing. This belief is affirmed by Mr. Qurashi, who is of the opinion that one only has to “build what they want, and they will come”, and perhaps he has a point. Given that he has good reason to be wary of the Dubai property business, perhaps his optimism is warranted.