View of part of the Fujairah Corniche and the Hajar Mountains in the Background

Wednesday, July 29, 2009

Property Market Update in Dubai, UAE

Microscope on Dubai Market
Hand-in-hand with worldwide economic downturn is the expectation of bankruptcy, liquidation, mergers and acquisitions; and, likewise, in a bid to reach a (hopefully) smooth road to market and economic recovery, cautious lending and property valuations in the sales and rent markets.

Here we point the microscope at Dubai’s market.

Merging Markets
Two major property management and property development companies have been granted by the government the right to merge, which will bestow upon them a shared 70% control of the country’s mortgage market sector in order to stimulate lending and boost the Dubai real estate market.

Protection Regulations Implemented
Following suit, the regulatory authorities have recently intervened with the current economic crisis, formulating laws which protect property developers and shareholders under the threat of defaults and a moreover menacing, huge financial loss. Meanwhile, however, recovery of the property market will continue to be bound by the high rates that have been imposed (standing at 7.5% - 9%) by the mortgage market, where we see that lending is still being held on tight reigns.

Key Feats
Key feats within real estate strategising therefore include scraping the barrel somewhat. It has been noted that a trickle of houses for sale are now being put forward for auctioning by some real estate firms, whilst, although the situation is not as dire as it was in this year’s first quarter, property valuation is still dropping in some areas for the time being.

Promise of Recovery
It must be said however that, despite the current climate, there is promise of recovery as far as property valuation is concerned (supposing that the recently identified recovery of local stock markets is lasting, and that the economic situation does not take a further turn for the worst).

Rental Prices Lowered
Moving onto rental prices, the rates of apartments for rent in Dubai have lowered as job losses have increased. This is a state which will fluctuate in response to external factors such as future instances of job creation, the mobility and potential employment of residents belonging to nearby cities (given that the lower rent has become appealing), and the state of the capital market – all of which, of course, appear to be mutually vulnerable.

Government Protection Crucial to Recovery
Intervention from the government and the Dubai real estate regulatory authorities are crucial to ensuring that Dubai, and in particular Dubai’s property market, continues to thrive and hold a high position next to other economic centres worldwide; widespread are plans for various fiscal stimuli and the protection of local markets to ensure rates of inflation begin to grow upwardly and confidently at some point in the next year.

Sourced from research carried out by Hamptons International, residential estate agents specialising in UK and International sales, lettings and property management.

Dr Geoff Pound

Geoff can be contacted by email at geoffpound(at) on Facebook and Twitter.

Image: “There is promise of recovery as far as property valuation is concerned.”