According to a recent report analysts and experts in the real estate market of Dubai and Abu Dhabi expect a further decline in the property prices during the next two years due to over supply of properties. How far do you think this analysis is correct?
You have read quite right as there is still a large gap between supply and demand in Dubai real estate. The market is also forecasted to further drop up to 10% as the fresh supply is expected in near future which will flood the market.
But here I would like to share some views about the reason that created huge slump not only in real estate but in the whole economy of Dubai because Dubai's whole economy is based on tourism.
Dubai witnessed unparallel growth of commercial and residential real estate, which was only due to the financial support of unlimited number of tourists, visitors and businesses. As limitless number of people migrated to Dubai, the value of the residential and commercial properties also increased simultaneously. Property builders also didn't spent any significant expenses when it came to designing and building world record breaking architectural designs. As the whole finances were supported by revnue generated by tourism.
Now the reason behind the slump in Dubai real estate values is that the global financial crises brought about a dramatic slow down in the flow of tourists, business entrepreneurs and commerce, which afterwards lead to the decline in real estate values.
The point which I want to state here is that no country can get strong economy until or unless it creates industrial zones, factories and economic cities that derive a steady and permanent income for the country.
Actually the projections of industrial growth give the real rise in real estate values. As the projects will literally mesmerize investors from all over the world and they will invest in real estate sector to make the city really grandeur. Then the city will never face any property slump.
Hi Saud,
As far as my opinion is concerned, I am not agreed with that report because problem of over supply with Dubai and UAE real estate industry is not as much severe as it was 2 or 3 years ago. Now, the problem of over supply of commercial and residential properties is almost over and a bit improvement has been witnessed in real estate industry in the Gulf region for the last several months. Dubai economy is expected to get better this year according to some experts which would definitely put positive impacts on real estate and property business as well.
(2 Replies)
