An oversupply of residential properties in Gulf Arab emirate Dubai will take three to five years to clear, the chief executive of flagship property developer Nakheel said in remarks published on Saturday.
General oversupply in the property market will be cleared, driven by economic growth, Nakheel Chief Executive Chris O'Donnell said in an interview on the Arabian Business website. (www.arabianbusiness.com)
"Things can happen to cause oversupply to be removed fairly quickly. Our view is based on what we are seeing in the market," he added.
Nakheel is the property arm of the Dubai World conglomerate whose debt restructuring is at the heart of the emirate's economic troubles.
Chairman Ali Rashid Lootah said this month that Nakheel, builder of Dubai's famous islands in the shape of palms, would complete its own restructuring by year-end.
House prices in Dubai have fallen some 60 percent from their peaks in 2008 largely due to oversupply, which Colliers International estimates to be around 20 percent.
Property consultancy Jones Lang LaSalle said in June Dubai house prices are not seen recovering before 2011 at the earliest, while oversupply in commercial property will see vacancy rates rise to more than 50 percent in 2011.
"There is a substantial amount of work to be completed there, in the order of 7 to 8 billion dirhams ($2.2 billion)," O'Donnell told the paper.
"That is going to be very positive for the market... These projects aren't going to be ghost towns but are going to be completed."
While Dubai World said in September it had near-unanimous approval for its $24.9 billion debt plan, Nakheel has yet to secure the backing needed for its own deal.
Lootah has said the company was in preliminary talks to list an Islamic bond, part of its restructuring plan, on Nasdaq Dubai.
Analysts polled by Reuters expect a GDP growth in the United Arab Emirates of 2.4 percent this year.
(Reporting by Martina Fuchs; Editing by Patrick Graham)