Experts sound caution as Cityscape opens

On opening day of the world’s largest property conference here on Monday, investors said they still want to buy property in Dubai but are worried that a worsening global credit crunch could spread to the UAE.

The fears were made abundantly clear when delegates said the American-fuelled recession could sour six years of escalating property values in the emirate.

“I am very confident that Dubai property will continue to make money for years to come but it will depend on how well the country weathers the current US economic crisis,” said Hans Frick, a Cityscape visitor from Europe who is looking to buy property.

“I’m hesitant to lay down any cash in case the real estate market here goes south. It’s hard to tell, people have been saying for years that Dubai’s property bubble would burst but it hasn’t, yet.”

Frick wasn’t the only nervous visitor at Cityscape, the largest property conference in the world, an event that is expected this week to draw 60,000 visitors and 1,000 exhibitors.

At an early morning gathering of hundreds of real estate industry professionals, many raised their hands when asked if they were worried that property markets could decline radically.

Financial experts speaking at Cityscape’s kickoff didn’t mince words about the financial troubles that might lie ahead even for oil-rich regions such as the Gulf.

Keynote speaker Marc Faber, Hong Kong Editor of The Gloom, Boom, & Doom Report, said much of the world, including Japan and Europe, is in the grip of a synchronised recession alongside the US.

Faber told delegates it would be a great error “to think that this region will not be affected” noting that infrastructure projects are being cancelled around the world alongside a “ huge slowdown in China”.

Peter Barge, CEO Asia Pacific for Jones Lang LaSalle, said Dubai needs to be fully aware that its booming property market is not insulated from the worst world financial crisis in 60 years.

An inflation rate in Dubai of 11.1 per cent this year - the highest in the UAE in 27 years -combined with a 40 per cent spike in real estate value in one year isn’t sustainable, Barge told delegates.

People in the Middle East “by now realise that they are not decoupled from the US economy and world markets.”

He advised that “no one will be immune” from the crisis.

Barge said that “globalisation has linked us all together.”

At a Cityscape press conference Monday, Oxford Business Group released numbers in its new 2008 real estate report showing that in Dubai, “the real estate sector contributed $5.5 billion to GDP in 2007”.

A further $6.4 billion in construction was recorded in Dubai last year, it stated.

By 2008 end, Dubai “should have an additional 44,000 residential units while in 2009, developers are planning to release another 80,000 units,” Oxford Business Group said.