$300 billion Dubai property boom may slow on power demand
Dubai’s $300bn real-estate boom may be slowed as the emirate’s state-owned power and water utility struggles to keep up with demand from residential and tourism projects, property developers say.
State-owned Dubai Electricity & Water Authority “is really struggling to keep up with demand and quite frankly I don’t think it is keeping up,” Peter Riddoch, chief executive of Damac Properties, the UAE’s largest privately-owned property developer, told Zawya Dow Jones.
“Power and water supply is one of the biggest challenges facing Dubai’s real-estate sector. In a number of areas, the government is playing catch up,” he said, adding that although none of Damac’s projects have been delayed to date, he is concerned about developments coming onstream later this year and early next year.
“We have a number of properties coming onstream in the near future and if properties are finished and the services aren’t ready, it will be a real problem,” he said.
Dubai’s power and water demand is rising by an average rate of 20% and 15% respectively each year, according to Dubai Electricity & Water Authority, or Dewa, as the emirate’s economy and population rapidly expand.
White collar expatriate workers are flocking to Dubai, attracted by tax-free earnings, and an oil-fueled regional economic boom is pushing up demand on services and housing.
The emirate’s population is expected to grow by almost a third to 2mn people by 2010, according to the London-based projects magazine Middle East Economic Digest.
Dubai is also using bumper oil revenues to embark on massive infrastructure development, which includes some of the world’s largest and most ambitious real estate projects, which will also fuel power demand due to the wide application of energy-intensive air-conditioning.
The National Bank of Dubai estimates that developers will pump $300bn into the emirate’s real-estate development over the next ten years.
The Burj Dubai, the world’s tallest tower, is being developed by Emaar Properties as part of its $20bn Downtown Burj Dubai project.