Pages Navigation Menu

Risk looms on Dubai’s luxury property

Night Illumination At Dubai Marina. It Is An Artificial Canal Ci

 

A Dubai Municipality decision to control the expansion of luxury property has stirred mixed reactions from developers and real estate companies.

Dubai has become synonymous with luxurious,high-end real estate properties, which are increasingly drawing in ultra-high-net-worth buyers. The emirate has even been compared to Monaco. Such a law, some in the real estate sector fear, may put all of that at risk.

Abdullah Al Rafie, assistant director-general of planning and engineering at the Dubai Municipality had said that a new law – currently in the making – will restrict an “uncalculated” expansion of lavish buildings in the city, while focusing on providing property to cater for mixed-income individuals, several local media reported earlier this week.

Al Rafie explains that the planned law should curb traffic jams clogging the city’s roads, which have been worsening, as some areas are limited exclusively to luxury buildings that only cater to high-income individuals.Meanwhile, low or mixed-income people, who work in those areas, have to commute due to the lack of housing that suits their income.

The new law should see the allocation of 20 per cent of land covered by the Dubai Urban Plan 2020, made available to build homes that accommodate low- or mixed-income people, local media reports.

“This decision clearly is in favour of economic stability and overall growth of the economy. There is quite a significant market for this segment, which has been previously ignored by developers,” Simon Gray, managing director at Chestertons MENA real estate company told Aficionado, sister publication of luxurymena on Thursday, November 27. According to Gray, at least “one million residents work in Dubai and live in other emirates, as they have been priced out of the market.”

Nonetheless, when enforced, the law may create some instability for top developers who have built the their core operations around high-end expensive property.It could be feared that the law might compromise the exclusive experience of living at luxurious districts, and hence bring prices down.

Gray brushes off such concerns,noting that the law wouldn’t necessarily have such an impact. “Most luxury areas in Dubai are gated and landscaped and provide a sufficient sense of exclusivity to their residents, so we don’t believe this law would impact the prices negatively,” he says.

Meanwhile Damac Properties states that despite the potential law, it would stick to its luxury projects. “We are one of the leading luxury developers in the region, and while recognising the need for a varied selection of housing options in Dubai, we will be sticking to our core business of luxury development,” says Mr. Niall McLoughlin, senior vice-president at DAMAC Properties.

Damac, known for its luxury real estate offerings, has several relations with Paramount Hotels & Resorts, and Italian fashion houses Versace and Fendi Casa. The company offers branded residential apartments and villas.

It remains unclear when the law will take effect, but until then, the future of Dubai’s luxury property remains ambiguous.

 

Originally published on aficionadome.com, sister publication of luxurymena.

Tags: , , , , , , ,