Dubai would have been able to get away with these setbacks, if there was just one or two at a time, but they arrived in such succession, that Dubai real estate market was left in the lurch by the severity of these setbacks. Some of these debacles could have been avoided, while others were almost unavoidable. Let’s look at some of these disasters holding up the growth of Dubai real estate market for the time being.
Financial crisis effecting global economies:
Financial crisis hit Dubai in many ways. There was so much construction work going on in Dubai, majority of these development have to be stopped because of serious shortages of finance. So many expatriates who were directly involved as the labors or working in another capacity at these construction projects were discharged from their duties, as a result they were forced to leave as per the Emirate laws. The exit of these workers resulted in further lessening in demand, which was already dwindling. Some other reasons for low demand include the completion of numerous residential and commercial units improving the supply side, abnormally high prices, and investors taking more and more interest in the neighboring emirates like Ajman or Abu Dhabi real estate. Plus, as it happens in recession, people are spending less on leisure activities like shopping or touring the high-profile places like Dubai.
Low Oil Prices:
Although, Dubai do not depend too much on its oil exports but the region surely does, especially its neighbor Abu Dhabi with considerably large reserves of oil. Dubai always anticipated a bailout in case of financial crisis. Now, Abu Dhabi whose economic stability largely depends on crude oil export (the prices of which are going down), is a little reluctant to support Dubai with a large enough financial aid. That is one of the main reasons why Dubai is left high and dry.
Amplification of the crisis by reporters:
Dubai has always been fortunate (and now unfortunate) enough to inspire reporters and journalists to put in a little bit of exaggeration when reporting about Dubai. The whole growth scene was covered like there’s nothing stopping Dubai, and now the debacles are projected as the tragic end to Dubai’s fairytale. It’s funny to see how quickly the number of cranes at Dubai’s skyline has been replaced in the news coming from Dubai, by the number of abandoned cars at airport parking.
Still there’s a silver lining in the cloud for serious investors and that is after experiencing abnormal highs and lows, Dubai will eventually become a rather normal real estate market, once the speculations are decelerated and the prices settle on a more realistic levels, it’d be much safer for the serious investors.
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