'Cooling off' of rents to lead to surge in Dubai real estate market, Alabbar forecasts

Mr. Alabbar's upbeat forecast emerged from his meeting with an audience of specialist investment professionals, many of whom track Emaar Properties, the real estate giant of which Mr. Alabbar is Chairman. He said: "Many of the development projects now in progress will come to fruition in the next couple of years and the effect of these will be to drive rents to realistic levels."

Mr. Alabbar told the audience at the event, organised by the emirates arm of the Chartered Financial Analysts (CFA), that the effect could only be positive. He said: "The pressures that have arisen from costs escalation and demand outrunning supply meant there were some who were priced out of both commercial and residential property. We have a Government that operates an 'open economy' policy. So it is left to market forces to determine prices. Currently, demand far outstrips supply but that will change."

The good news for investors and property owners, Mr. Alabbar added, was that returns on real estate investment would continue to "be healthy" as would premiums in the secondary property market. He told the analysts their investing clients would benefit. He said: "A realignment of rentals, moving them downwards, would have no significant effect on returns for investors.

"The property market is going through a boom period and I am very bullish about prospects for the City and Emaar. With new property laws imminent and some of the heat taken out of rentals I can only see the property market broadening.

"This is the reason why Dubai is a focus for real estate investment throughout the region and into the Indian subcontinent, where there are some 500 million people with significant buying power who are no more than two and a half hours flying time away. This is a market primed for growth and expansion."

He said: "Emaar has played a significant role in creating the public joint stock culture that is such a dynamic part of the UAE's economy. In the process it has created unprecedented value for investors and provided dramatically high returns on investment. While doing so it has taken on the responsibility for helping to create a culture of transparency and credibility in financial reporting that is unique to this region.

"Prudent financial management and the lowest debt to equity ratio of any major corporation in the region has made Emaar a model of corporate soundness. Following our recently completed rights issue Emaar is now in a position to withstand any cyclical realignment in any of its markets, either core or international, while continuing to invest and grow.

"The fundamental strengths of our business, prudent policies, sound strategy and imaginative expansion has led to Emaar becoming the largest real estate company in the world with a market capitalization in excess of US$40 billion."