Is The Dubai Property Bubble Really Set To Burst?

So what’s all this talk of the Dubai property market cooling then and the so called "bubble" set to burst? Once again it’s in the news that Dubai freehold property prices are set to slow, with some going on to suggesting a 10% drop in prices over the next few years. This may prompt some of you to ask, but haven’t we heard all this before? And the answer would be yes! Yet freehold property prices have remained buoyant, and in 2008 saw a 25% increase in the first 6 months alone. So what is going on you might ask?

Well its certainly become well known that Dubai real estate has seen some pretty crazy price increases since the Dubai Government announced freehold property ownership back in 2002. The Palm Jumeirah offers some of the best examples of the sort of price increase witnesses to date in the Dubai real estate market. The Palm Jumeirah, a man made island built out in the Arabian Gulf in the shape of the palm tree is clearly not your average development, but then neither are the premiums being reached. On some property prices are now around 600% up on the original asking prices, meaning a villa that originally would have cost $700,000 in 2002 now commands an asking price someone in the region of $3.5 million, a considerable increase!

Now clearly such price increases are not sustainable, and indeed this has proven true, with and inevitable slow down of price increases seen across the Dubai market as a whole. However for years now we have been hearing from experts that the bubble has burst and the market was going to crash, oversupply etc, yet here we are, no crash, prices are still on the up all be it at a much slower rate. There has been talk of the so called "bubble" bursting for many years now and still we are yet to witness this, of course any market that keeps going up like Dubai does has to eventually come down this is natural but I can`t see it really happening for a few years to come. Investors who want to sell Dubai property still are getting good returns and continue to build their portfolio`s.

So then, what’s the deal? Have the ‘experts’ finally got it right this time, and is the market set for a slump? With comparisons being made with the property market slumps recently witnessed in the UK, USA and Spain, many believe that Dubai could to fall foul to the global economic turndown. However unlike these property markets, the Dubai freehold real estate market is pretty much unique, has a higher level of control due to the government and government backed developers Emaar and Nakheel being behind the majority of property on the market.

On the question of oversupply, whilst there will be a large number of apartments coming onto the market in the coming months, Dubai’s population continues to increase at a rapid rate, and will continue to do so, as Dubai is very much a city looking towards bigger things. And of course for villas, there certainly isn’t a problem of oversupply. In fact it is the opposite case, with there being not nearly enough villas to cater to demand.

Whilst it’s certainly not possible to say for sure what will happen to the Dubai property market in coming months, a lot of what is being branded around in the press doesn’t seem likely at present to come true. All property markets have their ups and downs, and Dubai has been on a large up for some time now, but comparisons with the Singapore property market at the turn of the century seem well off, and Dubai property still looks to be a good long term investment no matter what happens in the short term. 

For Dubai Property Sale or Property Dubai we can always assist.
 

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