Tuesday, October 28, 2014

After managing the expected danger of another market crash, Dubai property market is finally moving toward sustainability. Despite showing continuous progress, estate market is growing at sensible rate to avoid overheating. Especially the residential sector has become the most prominent because of showing significant level of correction. After observing Emirate asset market for short term or long term, it can be clearly seen that growth rate in terms of price rises during the second quarter of recent year has reached to a sustainable level.

Dubai property is still under-priced as compared to international financial hub

Huge price rises of approximately 64% were observed for all type of real estate assets during the past two years, but still the asset prices are not too expensive. After comparing Dubai with other international hub cities like New York, London, Singapore, Sydney and Shanghai, shows that assets are still under priced in Dubai, UAE. Besides this difference in prices, this Middle Eastern city is very capable to compare with other international financial hubs. Strong infrastructure facilities and modern, well-constructed real estate projects have enabled this Emirate to compete with other counterparts. Moreover, excellent earning opportunities and the tax free lifestyle allow residents to generate disposable income that eventually lead them to buy home in Dubai. These factors make it equally suitable for local end users as well as international investors. Moreover, comparably low asset prices predict that still this sector has very strong potential of growth in future.

Regulatory measures supporting sustainability

After considering the significant rises in buying and renting prices, state government implemented several regulations with aim to control hiking prices. Mortgage and rental caps immediately affected asset prices across the city by making buying bit more expensive. On the other hand, rental cap stopped landlord to increase rents if they have already collecting the specified rent for their home. These regulations also supported long term buyers and significantly reduced flippers from the market. Such conditions have successfully dragged market toward correction whereas also stabilized the rental and sales prices during Q3 of 2014.

How property market balance among demand and supply? 

Although, regulatory measures played major role in controlling sharp hikes in rents and sale prices, it is also essential to maintain the right balance of demand and supply of property units. For short to medium term, market analysts predicted that majority of the upcoming projects are still in the phase of launching and will not deliver soon to create oversupply conditions in the Dubai property market. Market data shows only 5% rises in total supply of residential units which is reasonable with the rising population in the city. At this stage a question should be answered that what happens when market will receive huge supply of these ambitious projects, which are currently under construction phase. Analysts expected significant rise in demand across the city will efficiently balance the huge supply.

Developers are also showing more concerns while selling their projects. Now they also consider selling their projects to bulk buyers and investors showing their interest to flip projects that suits market. Although, flipping is usually not considered as a positive activity, when it is being done for good reasons, there is no harm. This clearly shows that property market is experiencing a self-correction phase and eventually moving toward the stability and sustainability after successfully managing the danger of second property bubble.


Sabeen Zubair has been blogging as ghost writer for past few years. I have blogged for several real estate, finance, business, travel, life style and home improvement guest blogs. I always try to keep my blog pieces informative and simple to facilitate my readers.

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