Dubai: The Good and the Bad of 2011
The great slump of 2008 jolted Dubai real estate, so much so that even after three full years, it has still not returned to its former glory. Despite the efforts of the government and the private sector, properties in Dubai have faced a continuous decline in prices for several years.
The start of year 2011 was no different as the property market continued to be a disappointment for local realtors. Despite that, many believe that the recovery of Dubai real estate is just around the corner. According to many experts and analysts, the property market has touched rock bottom and will soon start improving.
The U.S and European economies have also played a major role in destabilizing the prices of properties in Dubai. The office market in Dubai was primarily occupied by U.S and European based companies but with economic turmoil, many companies relocated, abandoning their offices. The global economic crisis also affected the Dubai property market since it heavily depended on foreign investment. The oversupply and recession combined to double the effect on the real estate market, thus making it highly unstable. Because of the fall in sales and rental prices, the Dubai real estate market has now become quite tenant friendly.
The fall in prices has been greater for properties in less developed areas while apartments and villas in posh areas are performing well and have maintained their resale and rental value. Sale prices of apartments located in the popular locations, like Jumeirah Beach Residence, Palm Jumeirah and Dubai International Financial Centre, also remained stable. However, Discovery Gardens faced a 10% drop in its price as individual landlords lowered their prices to attract buyers and tenants. The general trend in buying and selling of properties in established areas remains stable.
Right now, hotels are believed to produce the best returns for Dubai real estate as the number of tourists visiting the city state is increasing constantly and the hotels are large enough to accommodate the masses pouring into the city. The revenue per available room in Dubai hotels has increased to $119 for the month of August, which is much higher than that in the U.S and Europe.
The Dubai government is making serious efforts to nudge the Dubai property market back on track. The authorities have announced a new governance charter draft to attract foreign investment in an attempt to improve investors’ confidence. The Tanmia Initiative is another such step which focuses on offering protection to investors and realtors.
Considering all of these factors, it is hoped that the Dubai property market will soon start its recovery. However, critics still fear the possibility of the Dubai real estate market undergoing a double-dip recession, which can undo all efforts of the Dubai Government as well as the private sector.
Author Bio:
Susan Smith is a Dubai Properties expert. She writes frequently on the topics related to property marketing, Dubai real estate agents and property management.
