DUBAI: Dubai real estate agents and developers may shed workers as the global downturn hits home sale in the emirate where property accounts for about 30% of the economy, company officials say.
“The continuing global slowdown will inevitably lead companies to review their staffing levels and recruitment requirements,” said Peter Riddoch, chief executive of Damac Properties, the Middle East’s largest private property developer.
Job losses in Dubai’s real estate industry could spell the end of a six-year $475bn building boom in the emirate and undermine growth prospects at a time of global economic uncertainty.
Dubai, the first Gulf emirate to allow foreigners rights to buy homes, may be the first to see a crash in property prices as uncertainty over the region’s prospects and the global credit crunch undermine investor confidence.
Signs that the crunch has already hit Dubai are growing. Banks are tightening lending as once booming sales dry up.
“The Dubai real estate market has peaked and a marked slowdown is in progress,” said one Dubai-based real estate fund manager who declined to be identified. “My main concern is the exposure of UAE banks to the leveraged real estate sector.”
Secondary market property prices have fallen for the first time as buyers, struggling to meet installment plans, try to off-load units, and speculative cash buyers that once made a fast buck from “flipping” property are nowhere to be seen, experts say.
“The issue at the moment is that there aren’t very many buyers in the market regardless of price,” said Robert McKinnon, a real estate analyst and head of equity research at Al Mal Capital.
One agent at Betterhomes, Dubai’s largest property brokers, said his office sold just three properties in October, compared to a monthly “minimum of 50”.
With property sales at a standstill, real estate brokers are being forced trim staffing levels and review their internal structure.
State-owned Palm-developer Nakheel says that although it hasn’t halted recruitment, it is “being prudent and looking at the best quality and quantity of resourcing across the company” given the slowdown.
“The recruitment market is being affected by the global financial slowdown,” said Matthew Taylor, international director at property recruitment firm MacDonald & Co.
“It’s a good opportunity for developers to address personnel who are underperforming and control spiraling costs,” he said.
Taylor says the situation is being compounded by applicants from the US and UK badly hit by the crisis who still see Dubai as a buoyant market.
“They’re looking at this region through rose-tinted glasses,” he said.
There is also growing talk by those inside the industry that the current slowdown could force consolidation within the UAE’s real estate sector and some of the emirate’s largest developers appear to be scaling down work on their projects.
Nakheel is said to be slowing construction on its offshore projects. With sales flat and thousands of units scheduled to come onto the market in the coming months, other developers are likely to follow suit.
“We expect that any cancelations of projects will come from the smaller independent developers, rather than the larger listed companies,” said McKinnon.
Many observers and investors are pinning their hopes on the market picking up in early next year, but others predict the situation will worsen with investors showing no signs of regaining confidence.
“UAE real estate stocks are down more than 50% from their peaks, which, in my opinion, foretells the dire reality to be experienced in the local property market over the next two years,” said the fund manager.
Al Mal’s McKinnon says the next stage of Dubai’s real estate sector will be more focused on “end user” buyers rather than speculative investors.
“That process will take time given the current uncertainties in the global economic environment,” he said. – Zawya Dow Jones
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