Dubai’s ruler has approved an AED2bn ($554m) package to develop tourism, residential and commercial projects across the Gulf emirate, it was confirmed Thursday.
The projects, which include the renovation of the Al Maktoum Hospital area, will be carried out by state-backed Wasl Asset Management Group, Sheikh Mohammed Bin Rashid Al Maktoum said in a statement on his website.
The Al Maktoum Hospital area will be renovated to be “in line with the authentic heritage and cultural identity of the UAE,” the statement said. Plans include a mixed-use project with a museum, souq area, hotel and real estate complex.
The plan also includes the expansion of the Le Meridien Airport Hotel, the development of Al Muraqqabat area and the Jumeirah Beach Club project, the statement said, without giving any further details.
The UAE construction industry was badly hit by the global financial downturn, which saw real estate sales dry up and buyer demand fall. The number of construction projects halted or scrapped in the Gulf state increased to $170bn in August, Citigroup said.
UAE developers have since switched their focus to completing projects started before the crisis, with many now favouring state-supported projects such as affordable housing schemes.
Dubai-listed Emaar Properties this week launched a division to build ‘value housing’, in a bid to capitalise on government schemes aimed at addressing the region’s low-cost housing shortfall.
Government investment in Dubai’s real estate market could help spur renewed activity, said Nicholas Maclean, managing director of CBRE, Middle East.
“I think anything that happens to stimulate activity within the real estate markets is welcomed so a commitment from the government to spend into the infrastructure to create or improve some of the facilities that already exist is very important,” he said.
Dubai has unveiled a slate of government-backed financing schemes aimed at resuscitating its property market. The emirate’s Land Department last month signed a deal to identify suspended or offplan residential developments and offer them for sale or long-term lease to investors.
Analysts have warned that real estate prices in the UAE could drop by another 10 percent to 30 percent as developers add to supply in Dubai and Abu Dhabi while buyers dwindle.
Prices won’t show “any meaningful recovery” in the next five years, Saud Masud, an analyst at Dubai-based Rasmala Investment Bank told Bloomberg.
“We have some way to go,” Masud said. “Appetite is not consistent and supply is still channeling in.” He said values may reach bottom in 2013.
Arqaam Capital in a report earlier this month forecast a further drop of 20 percent.