Sheikh Mohammed’s new directives bode well for Dubai real estate
Ever since Sheikh Mohammed bin Rashid Al Maktoum took the reins as the Ruler of Dubai, the region has witnessed noticeable economic, social and cultural prosperity. Characterized by groundbreaking initiatives in the aviation industry, reforms in the maritime sector, and a revolution in real estate, Sheikh Mohammed’s tenure has been exemplary. The Dubai of today is recognized as a byword for foresight, vision and exuberance, and Sheikh Mohammed has had a significant role to play in achieving this. In a recent tweet titled ‘Letter of the New Season’ (1), he publicly articulated his vision for the future.
The letter consists of six important directives, addressed to government officials, leaders and citizens. Also included are recommendations for real estate in particular. Sheikh Mohammed’s emphasis on the sector attests to the crucial role of real estate, in Dubai’s overall development. As an open message from the apex of the nation’s leadership, this also represents a watershed moment for the real estate sector, where the need to balance commercial prerogatives with national goals represents the most progressive perspective.
Letter of the New Season
With an epochal event like the Expo 2020 round the corner, Sheikh Mohammed’s message takes on an additional importance. Judged by several of the most common parameters that nations are held to – such as growth rates and various human development indices – Dubai is soaring high and exceeding its own expectations. However, opportunities to achieve even better results are everywhere. This is the primary reason that Sheikh Mohammed’s call for effective on-ground governance has resonated with many. In his own words, he believes “we are a government of achievements, not a government of lectures. We are a team of accomplishers, not a team of preachers”. Prabhakar Rao, Managing Director of Gemini Property Developers, believes the thoughts shared by Sheikh Mohammed reflect his steadfast dedication to take Dubai to the highest echelons within the global community. “Unlike some other global cities, Dubai has many options available within the realm of possibility, and such directives from his highness can help transform these possibilities into opportunities,” Prabhakar Rao believes.
Recommendations for real estate
One of the key strategic inputs, that Sheikh Mohammed addressed to the real estate sector, was for projects to “adjust their pace” and added value to the national economy, without becoming a burden or a source of imbalance. Given the considerable impact of the real estate sector on Dubai’s economy, Sheikh Mohammed’s proposition has resonated among many industry insiders. The Ruler of Dubai acknowledged the general health of the economy, which he attributed to improved competitiveness and increased foreign trade. However, he also stated that in order to keep pace with Dubai’s towering ambitions, the pace of future development must go even further. He went on to add that, as a contributor that accounted for at least 25% of overall GDP growth in 2018, real estate holds great promise, while also bearing great responsibility.
Impact and implications
Just a few days after Sheikh Mohammed’s open letter, a committee has been set up to streamline real estate development in Dubai, in what can be viewed as a strong show of resolve (2). Chaired by the Deputy Ruler of Dubai and comprising of senior figures from real estate community, the new committee will work towards establishing market-equilibrium by ensuring a balance between supply and demand. Also on the agenda are initiatives to mitigate unhealthy competition between semi-government and private real estate developers, and the creation of a comprehensive and strategic blueprint for major upcoming real estate projects, in the next decade.
According to Prabhakar Rao, not only did Sheikh Mohammed’s message articulate the state of the economy and real estate coherently, the immediate actions that have followed demonstrate his resolve to act on these observations. Prabhakar Rao welcomes the formation of the committee, which he believes can better regulate the market supply and alleviate market glut concerns.
ValuStrat estimates that 42,176 residential properties will be added to the Dubai market by the end of 2019(3). However, the estimated numbers may not all materialize owing to delays. At the same time, property sales volume increased in the first quarter of 2019 on the back of increasing affordability and rents fell by 9%, during the same period. Against this backdrop, Sheikh Mohammed’s real estate directives will provide guiding principles to promote stability and overall harmony in the sector.
Sultan Butti Bin Mejren, Director General of Dubai Land Department (DLD), has welcomed Sheikh Mohammed’s real estate initiatives and recommendations, saying that it will create a sustainable environment for investors and companies in the sector (4). Echoing the same sentiment is Taimur Khan, Associate Partner at Knight Frank, who opines that Sheikh Mohammed’s message could provide the strategic orientation that leads to well-planned projects and communities, which add greater value to the market, as well as the overall economy.
According to Prabhakar Rao, these latest measures should be seen within the context of Sheikh Mohammed’s overall vision and recent regulatory reforms. While he has already eased visa and property-ownership regulations, he has now turned his attention to tying up loose ends in the sector, which should unlock tremendous growth.
In summation, Prabhakar Rao quotes his highness’ sixth directive from the ‘Letter of the New Season’: “Be optimistic. The next is better and greater. We are one of the readiest countries for the future”.