According to a top industry executive on Monday, Dubai rents will stay steady due to the city’s expanding population and government-supported initiatives like new residence and visa programs that are drawing in talent.
Malek Al Malek, Group CEO of Dubai Holding Asset Management and chairman of the Investment Committee of DHAM REIT Management, said from a wider market perspective, “There has been stability around the growth of this market, especially the rental market.”
He noted that despite the strong offers for new housing units, there is a clear demand for the various housing products behind the growth of population at 3.9 million.
Dubai’s asset management portfolio consists of 35,700 housing units and operates over 140,000 residents in 21 communities.
After a four-year rally on real estate prices and rent, industry players interpret the market as stable as growth rates in most sectors in the Emirates change from double digits to single growth of single digit growth.
However, other industry leaders believe that a 10-20 percent decline in rentals in the next years is “good” for the market and will keep them at a reasonable level for residents.
Malek stated that their prognosis is “still bright” due to a few structural factors such as population growth, a good economic outlook, government policies that encourage diversification, visa schemes, talent recruitment, and ease of doing business.
“All of this indicates business for residential REIT,” Malek said at a virtual conference on Monday, following Dubai Holding’s announcement that it would make an initial public offering (IPO) of its Dubai Residential REIT on the Dubai Financial Market, selling 1.625 billion units. This represents 12.5% of Dubai Residential REIt is issued unit capital. The REIT IPO is Dubai’s first public offering this year.
Malek shrugged off any impact of a global trade war between the world’s top economies on the local property market, saying “We’re fully confident that we will not see the cycle of bust and actually growth in a rental market in a city like Dubai. We’ve been running this business for over 20 years and have seen a lot of volatility come and go. However, our strategies have always been a long-term investment, especially real estate residential.”
He emphasized that the corporation has put in place procedures to ensure that the portfolio continues to produce.
“We are sure that the fundamentals of this residential REIT are absolutely positive, and we hope to capitalise on them as we move forward.”
