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Dubai Real Estate Boom or BustContinued Growth with Arrested Rates Abound in the UAE
The Real Estate Market matures, internal factors slow down the overheated sectors while external features are still hot & provide excellent growth.
According to W. Jonathan Wride, Managing Director of Capital Partners, the Dubai-based American real estate private equity fund, the wild west days of anything goes has come to an end. Prices are still climbing and purchases are still a profitable investment, yet the exponential growth rates have slowed in many areas. The BustNot much of a bust but more of a slowing of the rapid growth rates real estate has experienced in the UAE, mainly Dubai, the last 7 years. This is not to say real estate prices are not going up. To the contrary some unique properties, like the world's tallest building Burj Dubai, are still seeing those double digit annual rates, but overall prices have slowed their pace. This unique growth is tampered by huge internal factors affecting the market. The large volume of construction projects set to come on the market beginning in 2007 and continuing through 2010 have some individuals jittery. Simon Azzam, chief executive of Union Properties in Dubai says,"…the market has started to appreciate the difference in quality and developers will soon find themselves not being able to sell anything at any price… While he believes that Dubai has a shortage in villas since they are in high demand, the apartments market suffers from a mismatch." The BoomHowever, external factors like a rising Euro (UAE’s Dirham is tied to the US Dollar), low interest rates and a rapid increased in new residents are causing a contradiction to this trend. In May of 2003 the Euro saw an all time high of 1.193 against the dollar; however, in July 2007 the value is $1.3715. With the dollar at all time lows compared to the Euro, Europeans find Dubai’s real estate an ever growing bargain especially when compared to other parts of Western Europe. Even emerging markets like Montenegro are showing skyrocketing prices. Jovan Jovanovic, Manager of Colliers International Serbia said “the price of new modern buildings in the popular towns…is now between 2500-5000 Euros per square meter while in Budva; Sveti Stefan and Petrovac prices are ever higher, according to Colliers International Serbia.” Along with rising European prices and falling dollar values Dubai has a third factor, immigration. “The Dubai Ministry of Planning predicts that at the current rate of growth, Dubai's population will almost double to more than 2 million people by 2010, and up to 4 million by 2017." With the massive number of new residents the city and country will need housing. Whether a strong housing demand or lagging national infrastructure will continued the real estate boom or create an inflated bust are yet to be known. Whichever event occurs first will tell the tale of Dubai’s real estate future.
The copyright of the article Dubai Real Estate Boom or Bust in Buying/Selling a Home is owned by Frank W. Hardy. Permission to republish Dubai Real Estate Boom or Bust in print or online must be granted by the author in writing.
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