Amazing fact: around 30% of the world’s cranes are currently in Dubai taking part in a massive amount of construction jobs. Despite the price of oil falling by 70% in recent years, Dubai is famous for being one of the fastest growing territories on the planet and has built up its reputation as the world’s most glamorous and glitzy city.
Prices of residential property in Dubai are climbing by the day. The market fundamentals together with a modest regulatory environment have managed to boost the real estate sector to almost unimaginable heights.
Dubai is now the hottest international property market in the world, accomplishing massive real estate projects like Burj Khalifa and Burj Al Arab and renowned property wonders like World Island and Palm Island while pumping billions of dollars into development property projects of the city. An increasing population and growing GDP attracts a large number of foreigners towards this town as they come to make Dubai their 2nd home.
The real estate market industry changed in 2002, when the state government implemented new laws for ownership of Dubai properties for international purchasers. According to the new law foreigners are permitted to buy freehold and leasehold properties in various aspects of the city.
Due to the steep escalation in prices over the past decade, a number of measures have been put in place to regulate the Dubai real estate market. And although the government introduced a regulatory reform in real estate with UAE laws supporting transparency and a better regulation environment, many say that there are no signs that the market is slowing down.
Moreover, 3 main factors could be seen as future motivators for further increase in the value of Dubai real estate:
1. Growing Economy
Despite decreasing oil prices, consumer spending and corporate confidence have remained stable. The economy of UAE is not solely dependent on oil today. The country’s government has dipped in critical investments for infrastructure and other national projects. Non-oil sectors continue to grow, providing a solid base for a UAE economy growth.
2. High Rent Returns
Rent on property is becoming an important factor for the local economy. Rentals have been seeing larger ROI and are adding revenue to the market on a regular basis. This results in a handsome return on investments for investors.
3. EXPO 2020
The Emirates expects 25 million visitors to the 2020 EXPO world fair. This will trigger the administration to build new infrastructure and thousands of hotel rooms, affecting the entire real estate market. Also, there is no doubt that Expo 2020 will create a significant amount of new jobs and further boost the economy.
In spite of everything mentioned above, others believe that property prices will fall in the following years. Given the current real estate climate plus memories of the 2008 crash, one can’t but wonder if Dubai’s property market hasn’t reached a peak.
Could the real estate market of Dubai be once again moving towards another huge bubble given the fast rising property prices within this region? For investors, could it be time to seek a solid alternative? We’ll leave these question open for now.