'Credit Crisis' good for long-term health of UAE real estate market

Particularly for the real estate sector, where the boom that has been witnessed in the country - and the region - over the past few years has seen a number of small and, in some cases, unscrupulous real estate developers springing up everywhere.

Al Harbi's comments came after the recently-held International Property Show 2009 (IPS 2009), which took place from 15 to 17 February at the Dubai International Convention and Exhibition Centre.

Explaining his reasoning, Al Harbi said:

"When the real estate market was growing so fast, it presented an attractive prospect for many people who wanted to get rich quickly. Unfortunately, what this meant was that while there were some true entrepreneurs who benefitted from the boom, there were also a number of people who opened up real estate companies, paying the required ten percent to purchase a plot and draw up a project design, and then sold off the project to investors as the 'developers', not actually having the capital to progress with the project. In fact, I met many people who had one job one week - such as hairdresser or valet - and the next time I met them they had set up their own real estate development company,"

"The fact that many of the people starting up these companies were either inexperienced in the market, or unclear on all the requirements for developing projects of any magnitude - be it small or large - or just plain unscrupulous and looking to make a quick buck, meant that not all projects that had been launched had necessarily been properly planned, which is just a recipe for disaster, and sooner or later something was going to give," he continued.

"I believe that although the global financial crisis may have set off the correction that is now taking place in the market, it was unavoidable and it would have happened eventually. Looking at it like that, it is better that it is happening sooner, so that Dubai, in particular, can now develop a more realistic and mature property market that will stand firm and continue to grow for many years. In this vein, property shows such as IPS 2009 are really important, to show investors and others that the real estate market in Dubai, and the region in general, is still strong, and that there are many projects that are still going ahead that are good investment prospects."

Al Harbi has a number of business interests in the region, and among the positions that he holds is that of CEO Eye of Dubai, a company that focuses on promoting the emirate across all sectors to investors, tourists and residents alike. Eye of Dubai also participated in this year's IPS, reflecting Al Harbi's belief in the overall strength of the property market, and that the current market correction will benefit both the emirate and the region in the future.