August 20, 2014

Factors Involved in Dubai Property Market Fluctuation

David Marsha is a travel blogger who use to write about travel and tourism around the world. He also writes for Better Homes who offer homes to buy or rent in Dubai.

Burj Khalifa

Real estate market of Dubai has revealed some outstanding changes to international real estate and construction industry. The emirate displays a perfect mix of tranquility and full of life world class markets along with numerous other fun and entertainment activities for everyone visiting, living and working in the city. Emirate’s Government has wisely invested its petro dollars to develop this emirate as a chief hub of commercial activities possessing state-of-the-art infrastructure with finest business environment. Moreover, investors can also take advantage of several value added options like free trade zones and tax free business and investment opportunities. The emirate is known as one of the most dynamic business centers in the Middle East Region.

Dubai is world famous to provide luxurious accommodation place for those who are in love to spend their life in a city offering highest living standards with all amenities of an urban lifestyle. The city has displayed a very high rate of construction and development to build all kind of properties, which include residential, commercial, retail and industrial developments. Such a massive production of huge real estate development projects has created numerous opportunities for investors, entrepreneurs and job seekers from local and foreign market. Moreover, State government also allowed non-UAE residents to buy freehold properties and investment opportunities in almost all business sectors. Availability of jobs with good accommodation options at affordable rates drag attention of job seekers across the world. This results in drastic rise in population of this city that specifically benefits people belong to real estate industry business.

High Demand and Low Supply

Like all other businesses Dubai property market also showed fluctuation in regard of demand and supply. This is because of the significant rise in population and comparatively low supply of real estate properties to execute accommodation and business needs of local and foreign residents and business persons.

Global Economic Recession

Another important factor that causes a great fluctuation in Dubai property market is the global economic recession. During the years of 2007 and 2010 estate market showed considerable decrease in Dubai property demand because of high unemployment  rate everywhere in the world including UAE.  Good thing is that the real estate market started showing stability in downfall of property prices in first quarter of 2011. Real estate analysts predicted that market will regain its previous position in 2012.

Over Supply of Real Estate Properties

Besides global economic recession, another reason for the decline in Dubai Property demand and its prices is the oversupply of real estate properties by developers.  After observing initial trends of making good profits, number of local and international investors started making huge investments in new property development and construction projects in all sectors. This has created a surplus condition in estate market by supplying huge number of properties for sale in the market. Few areas like Jumeriah Village and Downtown Dubai experiences oversupply of properties. As many people prefer to become a tenant due to low property rents in these areas.

Irrespective to the cause of fluctuation in Dubai property market, home owners and commercial property owners find it better to rent out their properties rather selling it on lower prices. They can make good profits this way as number of people across the globe visit Dubai for tourism and holiday purposes.  Renting out properties can benefit property owners by providing them monthly income and they can also increase the capital value of properties.

 

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Comments

  1. Dubai’s property market matured to become more segmented, comparable to established cities like New York, London or Paris. Fluctuations in Dubai’s real-estate values began to depend on ‘real demand’ dictated by the quality and desirability of certain properties within different districts.

    As a result, Dubai’s property prices haven’t moved in a uniform direction for three years. Meanwhile, the latest data from REIDIN, a world leading real estate information company, has found that prices have now risen across the board. More importantly, this price increase has been recorded in Dubai’s quietest month, which usually sees price declines due to minimal levels of tourism and Ramadan which dominates the entire month.

    This is a significant point in Dubai’s road to recovery. The Emirate’s economy is already expected to grow at a much faster rate than the major European nations or the USA this year according to the IMF, but with the added boost now predicted from a growing property market, Dubai is very well placed.

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