The Property Market in Dubai
Published on 27 February 2007
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The intriguing results of a fascinating survey have just been released by Dubai events organisers DSL Exhibitions – ahead of the company’s Resale and Rental Property Show they sought to question a broad and representative demographic mix of local residents and expatriates already living in the emirate about the property market in Dubai and also the construction industry and the future for the emirate in terms of its real estate industry.
The findings are really interesting - they reveal some anomalies, they reinforce some concerns and overall they paint an honest picture of the property market in Dubai and how it really is right now. In this article we summarise and analyse the results.
The initial section of the survey focused on supply of and demand for property in Dubai and ironically, the majority of respondents said that they felt there was over supply and a shortage of current demand for luxury apartments – and yet that is the vast majority of real estate stock waiting to come to the market and it is still the type of stock that most developers are planning on producing in the near term.
It’s not just a question of apartments being oversupplied but luxury apartments…those surveyed understood the need for high density building of residential property but advised that there was a lack, as far as they were concerned, of mid range apartments to buy and to let. Additionally mid range two and three bedroom villa homes were in demand with supply not sufficient to meet the current buying and renting market interest according to the respondents.
Ideally survey respondents felt the government should take action and guide constructors and developers to consider lower ends of the affordability bracket when it comes to the creation of new homes…luxury is not what everyone wants, demands and can afford.
When asked about the general effect the construction boom is having on life in Dubai 72% of all those surveyed stated categorically that the construction works have had a directly negative effect on quality of life because of congestion on the roads, damages to infrastructure caused etc., and that all in all the most worrying concern among all those questioned was the fact that rental rates in the emirate are now soaring as stock is late to the market and demand for housing is so intense.
These concerns may be allayed somewhat in light of the fact that for the second time in a row there have been rental rate increase caps announced for Dubai in 2007.
Those who were more upbeat about property in Dubai were those surveyed who were already on the property ladder in the emirate.
In terms of anomalies that the survey highlighted, there was a huge division of opinion about whether personal direct experience of and exposure to the property market in Dubai was positive or negative. Of those who said their experience was negative it was largely because of poor customer service encountered and of those who said their experience was positive the majority said it was because of good customer service encountered! This suggests that standards are not the same across all constructors, developers and agents and that there is the possibility of positive or negative prejudice in the property market.
92% of those surveyed demanded better regulation in the construction industry and a majority voted in favour of decentralisation of urban planning to take the strain of critical road arteries and real estate markets with almost everyone in favour of the government taking decisive action to improve the property market, ease traffic congestion, make rental rates more accessible and to make the whole property market safer to invest in.
Thanks to DSL Exhibitions for the findings of their survey.
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