Oil field should boost sector

Article from Freehold Monthly

Article from Freehold Monthly

The discovery of a new offshore oil field is likely to boost Dubai’s economy, although its impact is hard to gauge until its volume is determined, say real estate executives.

With production to begin in 2011, they think the resulting hike in revenue could boost infrastructure development.

“It is hard to tell what impact this will have until we get more information on this,” says Charles Neil, CFO of Landmark Properties. “Then we can judge the impact it will have on finances and infrastructure. More money flowing into the economy will be a positive development. There would be an increase in people to work in production and housing, and revenue flowing in for infrastructure but without barrels per day it’s hard to say.”

Mohanad Alwadiya, managing director of Harbor Real Estate, says the discovery should boost investor confidence, but adds this largely depends on the oil field’s output.”This positive effect will surely rub off on the property market,” he adds.

“Irrespective of the capacity, it can only add to Dubai’s income stream,” says Aditya Awtani of Fine and Country. “The mantra ‘buy on the rumour and sell on the news’ has worked well for many equity traders. However, in the real estate market, especially one that has dropped significantly, investors naturally shall remain on the sidelines until there’s concrete data.”

As the oil field’s production picks up, it will have a positive effect on the property market as well, says Aditya.

“Experts are predicting approximately 10,000 barrels could potentially be pumped via the Al Jalila oil field. If this is to be believed, that would imply, at today’s oil prices, an additional $270 million for Dubai.” This would help reduce the emirate’s budget deficit, he adds.

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