The recent dip in the Dubai property market is leaving real estate brokers frustrated after a long recovery from the global 2008 crisis which collapsed the property prices the market has seen a bounce back, so much so that the Government of Dubai was forced to slow down the market by increasing transfers fees from 2% to 4% October 2013.
Since then the market has been holding steady with slow month on month growth. That was until the last couple of months when the property prices showed signs of slowing down and in some locations like International City and Discovery Gardens prices have started to reduce.
Listings from property portal Sandcastles.ae which advertises property from a number of leading real estate companies has shown a dip in property prices in a large number of cases property prices have been reduced to move the property.
The real question is why has this happened and will it be a long term downward trend?
There are a number of theories we have gathered from agents here they are:
Theory No. 1: It is summer time and property buyers tend to slow down during this time of year. What we are seeing is normal and we should not be worried about the property price continuing to follow downwards.
Theory No. 2: Following the Expo 2020 announcement landlords placed the property price at unrealistic values. The market is now correcting itself, as the prices for a six month event in six years should not have had such a spike on today’s price.
Theory No.3: As most of the investors in Dubai are from abroad the investors are looking in their home countries for investment opportunities. Following the crisis of 2008 the global economy is showing solid signs of recovery so investors are buying property in their home countries.
Theory No 4: in 2006 and 2007 investors could buy a property for 10% deposit and within a matter of days the property value would go up by 10% thus the investor would sell. This doubling of money was only achievable in Dubai and now that market has gone for good. Today we have a more stable Dubai market and property launches do not have the same international appeal that they once did.
Theory No 5: The price is just too high and we need cheaper property to bring in new investors. In my option this is not a solid theory as property prices in International city the budget living location in Dubai have started to show sign of reduction and prices are still not at the 2008 peak.
And finally Sandcastles.ae Theory: The price of property is subjective, what is relevant when investing is the return on the investment. Dubai offered massive gains in the early days and for those bold enough to invest after the 2008 crisis when prices were at a new low.
For many investors will look at other opportunities perhaps outside of property in Gold, Forex and other investment markets also property in their home countries in an attempt to get quick gains.
Today we have a market where the prices are increasing, holding or dipping under semi-government control an intelligent more seasoned approach to investing is required, todays investors should consider the countries fundamentals of trade, GDP its government and stability in the Middle East.
If you consider these fundamentals Dubai is in a good position. Dubai has proven itself. Dubai has develop infrastructure, Airports, Roads, Trams and Metro , won the Expo 2020 bid all this during a time when the rest of the world was stalled and confused with a financial crisis.
In our opinion Dubai is still a land of opportunity, we need to bring back the private developers and give them incentives to start construction of affordable housing projects. This in turn will bring in the investors who are looking at a new Dubai with from a fresh perspective.
This article was written by Sandcastles.ae Property Portal a leading property website. Opinions are based on conversations with various real estate agents, market data and analysis of the search traffic from the Sandcastles.ae Website and Mobile Apps.
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