Golroo Blog

Dubai’s Burj Khalifa, the world's tallest tower. Photograph: AFP

DUBAI – The shock, last minute rebranding of Burj Dubai, aimed at reinforcing Abu Dhabi’s backing of Dubai, may only provide fleeting reprieve to sagging confidence in Dubai’s real estate market, analysts said on Tuesday.

“There is going to be a positive perception impact in the short-term, beyond that I do not think it (the renaming) is a big deal,” said Saud Masud, head of research at Swiss bank UBS in Dubai.

Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum on Monday evening inaugurated the world’s tallest building, unveiling its plaque to reveal the name Burj Khalifa in honour of UAE President Sheikh Khalifa bin Zayed al-Nahyan.

The name-change is being seen as part of attempts to portray a more unified UAE as well as boost confidence in Dubai after a real estate crash and debt crisis that have brought the emirate’s economic credentials into question.

Dubai’s real estate market, once the envy of the world, came crashing down to earth last year in the wake of the global financial crisis, with property prices tumbling by more than half and billions of dollars worth of projects axed.

Residential sale prices in the Burj Khalifa have also been hit by the crash, currently standing at around 4,100 dirhams per square foot compared to as much as 10,000 dirhams at the peak of Dubai’s real estate boom, according to brokers.

Brokers said prices have already begun to rebound following the launch of the rebranded 828-metre tower, but projected prices would soon level off when the initial euphoria dies down and the reality of market fundamentals sink in.

“People who wanted to sell are already asking for more money,” said Iseeb Rehman, managing director of property consulting firm Sherwoods.

“After the initial excitement, the prices will level off. They have to level off.”

Dubai is facing a massive property oversupply, a hangover from boom-time construction, and the Burj Khalifa will add another 1,044 residential apartments and 49 floors of office space into the market.

Already one in four homes and a quarter of office space in Dubai are empty, according to analysts.

“The name of the building itself purely from a real estate fundamental perspective makes really no difference,” said Chet Riley, an analyst with Nomura Securities in Dubai.

“I don’t think there will be any sort of real material change (in the real estate market).”

Emaar Properties, developer of the Burj Khalifa, has said the tower will give a much-needed confidence boost to the market and is forecasting the opening to positively impact profit in 2010.

Emaar has said 90 percent of the tower is sold and that it will hand the keys over to the first residents in February, with the entire handover programme expected to take up to six months.