Delays annoy Dubai property buyers

While this column gets comparatively few complaints about the quality of Dubai property from owners, delays in delivery are something else. It is impossible to verify whether all these claims are true but hard to think that they are malicious.

Perhaps it is arbitrary to name examples, but Damac Properties' projects are apparently running a year or more late. And the buyers of Nakheel's villas in the Jumeirah Lake Islands have just found their already late delivery date this autumn has been put back again.

This is perhaps to be expected. A great deal of construction is going on simultaneously in Dubai, and developers err on the optimistic side when promising delivery times. To be fair they are in turn dependent on contractors completing on time, and are also generally left waiting for their money due to the delays.

The practical answer for the Dubai property buyer is to take a conservative view. It might possibly cost you a little in lost rent, but better that than having to find temporary accommodation for a family at short notice. This is very inconvenient and time-consuming.

There is also the difficulty of actually finding anywhere acceptable to live. For construction delays put pressure on the whole supply and demand equation. So take a cautious view to avoid problems.

Real estate agents think this situation will begin to ease by autumn 2006 when some of the very large projects are handed over - or at least that is when they are presently scheduled for handover. However, the tendency towards construction delays may get worse before it gets better.

In part this is down to the sheer scale of construction that is underway in Dubai with more than $50 billion worth of building work in hand and 200 towers on their way up.

The openness of the UAE economy has resulted in comparatively few bottlenecks for materials or labor but mobilizing so many sites is a nightmare and often it is management expertise that is in short supply more than anything else.

What effect will construction delays have on the overall property market? In the short-term logic suggests anything that restricts supply will tend to drive prices higher. Longer-term it could mean that when a downturn comes in the future, it will be bigger than otherwise might be the case.

On the other hand, the delays impose a physical barrier that slows down the development of the market and prevent overbuilding to a degree. That might not be a bad thing in the context of plans that occasionally look a little over-optimistic in terms of demographic projections.