We all know about Mexico's Gulf Oil Spill. What if something similar happens in Dubai? Will it cause the property prices in Dubai to decline and have UAE and Dubai taken some preventive measures in advance if any such problem occurs?
The direct impact on Dubai's economy might be negligible because it is a well diversified economy and isn't totally dependent on oil for its economic health.
The indirect impact can however be materially significant depending on the scale of the catastrophe. As tourists can get affected, the fisheries might suffer, and the trade route for sea passage might get affected. I however do think that this whole phenomenon has been a learning lesson for all and everyone will now ensure such nightmare doesn't happen again, and let us pray it won't recur anywhere else in the world. It is a terrifying crisis for the economy, jobs, and monstrously disastrous for the ecological system.
No doubt, oil spills haunt the residential, commercial and vacation real estate markets and the biggest potential regions that suffer a lot are the coastal areas. Most of the times, it is observed that the coastal line has major proportion of commercial buildings that are used to cater the travelers. It can include hotels & restaurants and the direct effect of oil spill is on this sector of real estate. The rental prices decrease at once, people prefer to cancel their trips and do not visit such places.
Most of the construction companies do not construct the luxury resorts or buildings near coastal line as they are not sure about any future happening.
Next comes to the property prices in the coastal regions, property prices at once decline due to any catastrophe as people at once take back their decision to invest in such regions. But these impacts are not so long lasting that can decrease the property prices for long. Once the situation settles down, prices gradually go up. But owners have to invest more in advertising their properties after spill or any such happening.
On the whole, no one can bound the natural happenings to occur but Dubai Government should keep a proper distance between the commercial activities like shipping and the buildings construction on the coast, to avoid any mishap in future.
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