Xinhua, Dubai :
Companies keep announcing big budget construction plans in the United Arab Emirates (UAE) despite warnings the sector needs to cool down amid double-digit price increases.
The UAE real estate market, especially in the Gulf state’s capital Abu Dhabi and Dubai, witnessed an over 30 percent rise in apartment rents in the last 12 months, according to Dubai-based analyst firm Reidin. The International Monetary Fund (IMF) has urged the UAE to advance measures that will prevent the property market from falling into another devastating boom-and-bust cycle like in 2009.
Despite these warnings, businesses are keener than ever to launch new projects, even during the usually dull summer period when outdoor temperatures rise to nearly 50 degrees Celsius during the day.
Earlier on Sunday, Dubai’s state-owned developer Nakheel said it signed a contract worth 326 million U.S. dollars to build a 418, 000 square meter large mall on the man- made luxury island Palm Jumeirah.
Earlier in the week, Nakheel, who nearly defaulted in 2009 putting Dubai on the brink of bankruptcy, said it achieved in the first six months 2014 a net profit of 1.85 million Dirham or 504 million dollars, a stunning 54 percent increase over the same period last year.
Nakheel’s Sunday announcement was the second major mall announcement the sheikhdom witnessed within just one week. On July 5, Dubai ruler Sheikh Mohammed Bin Rashid al-Maktoum ordered the construction of “the mall of the world” along Dubai’s main artery, Sheikh Zayed road, which will be according to him, the biggest shopping center complex globally, comprising a temperature- controlled outdoor boulevard along with 100 hotels.
Meanwhile, Abu Dhabi continues to expand its international airport by a constructing a new midfield terminal that costs around 10.8 billion Dirham or 2.94 billion dollars and is on scheduled to open July 2017.
Low interest rates, political stability and constant high oil prices paired with a high degree of investor confidence continue to fuel the demand for property in the UAE, said Farouk Soussa, the chief economist for the Middle East and North Africa (Mena) at Citibank in London.
