Exclusive: Emaar’s Mohamed Alabbar Dismisses Property Bubble Fears

Dubai’s property market is back and the fundamentals are stronger this time, according to the chairman of the region’s largest real estate firm.

Speaking exclusively to Gulf Business, Mohamed Al Alabbar, chairman of Dubai-based Emaar, said: “Banks are tight on lending, the central bank is tight on lending, government regulations are being modified and monitored. So I think we are fine but people like to trade, people are greedy and so mistakes do happen. But as long as we minimise our mistakes, and we learn from our past mistakes – we go a little safer.”

Emaar has been one of the most active property developers in Dubai in the last year, launching dozens of new projects. Earlier this week, the company announced the relaunch of The Lagoons project with Dubai Properties Group.

A display of the massive development was revealed on Monday at Cityscape Global, which saw new launches from dozens of developers including Nakheel, Meydan, Sobha and Damac.

READ MORE: Live Updates From Cityscape 2013

Property prices across the emirate for residential apartments have risen by 42 per cent in the last 12 months, according to a report by Asteco. But Alabbar says the hike is inevitable.

“All the sectors of the economy including travel, trade, retail and airport traffic are growing very well. So, of course, when you have activities in all these sectors it will affect real estate,” he said.

“We’ve come from a very hard five years. We were supposed to grow at three or four per cent those years and we didn’t, so we need to catch up and hence prices are going up.

“But the amount of supply coming in will balance the whole market,” he added.

Dubai’s property market was hit hard after the financial crisis in 2008, with prices falling almost 60 per cent. While the current scenario bears resemblance to the pre-crisis era, some key lessons have been learnt, said Alabbar.

“Banks have learnt, the central bank has learnt, the government has learnt, people have learnt. Some people forget the lessons, some people don’t – that’s nature, we can’t change that.

“Banks have learnt, the central bank has learnt, the government has learnt, people have learnt [from the crisis]. Some people forget the lessons, some people don’t – that’s nature, we can’t change that.

“But if everybody got scared, they would never do this [launch new developments]. Thank god we are not that type, otherwise we will never grow,” he added.

With experts, including the IMF, warning that rapidly rising property prices may lead to a bubble, Alabbar says talk about a boom and bust is “healthy.”

“It will make people rethink and be more careful. They will look at the market and say how can we do this right,” the chairman stated.