Tuesday, 13 October 2015

2015 - A challenging year for Dubai Real Estate

The current has been a challenging period for Dubai Real Estate as property transactions declined and property prices dropped, apartment prices have dropped around 12% at the end of the 3rd quarter. This drop in property prices is expected to stay at least till the coming few months, experts believe. The property start falling after the land lard imposed a mortgage cap and increased the transfer fee, these efforts worked well to cool down the market but at the same time some external factors like a drop in oil price, property fluctuations and new inventory that is on the way to release. The new inventory of property has been exaggerated and developers are now looking to release new inventory of properties which is in line with the absorption rate of the current market. This is a good move to regulate the supply and demand fundamental and will also help to stabilize the property market in the longer run. On the other hand rental prices have not seen any major fall and seem to relatively stagnant or have fallen by a negligible percentage. This is welcomed news for buy to let investors as they can now pay less to buy property and get the same rental yields as in the peak time of the real estate market. Though sales and rental prices are driven by different factors one common factor is the supply and demand level. Rental prices are mainly affected by this phenomenon while as sales prices are decided by a number of factors put together which include economic growth, supply demand, investor’s sentiment, interest rates and currency fluctuations. 



Amid the slowdown Dubai developers are optimistic about the things to turn positive as work starts on infrastructure projects for the EXPO 2020, major projects have been lined up for this mega event which is expected to bring a huge number of visitors to the country and create jobs for accomplishment of infrastructure projects. The new projects around the site of the EXPO 2020 will extend the city to a larger extent and new residential and business opportunities will be created.  Other major projects are also underway with some of them as iconic as previous ones and other that will be a huge than what Dubai Real Estate market has witnessed so far, these new developments will further add to the amazing skyline of the city and is expected to bring investors as the city gears up for the Expo 2020. The government is also emphasizing on affordable housing which is a huge need of the real estate market as majority of the population in Dubai are away from being landlords due to affordability reasons. Affordable housing will open a new segment and will bring the mid-income earners into the property scene this can have a huge impact on the local demand and open a new line of products for investors which can be a prolific investment looking at the influx of people into the country. Affordable housing will also lower the pressure on the city road and train infrastructure as people can choose to live near to the workplace and this can help in the overall economic growth of the country.

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