If you are in anyway associated with Dubai real estate, you must be familiar of the fact that oversupply was the major reason that collapsed the once spectacular Dubai real estate back in 2008. Since then, the prices of the properties in Dubai have slashed by more than 60%. The question here arises, why despite the passage of 3 years the problem of oversupply still persists in Dubai real estate sector. Is it because that Dubai government is unable to generate enough demand to bring down the property prices or is it because that the supply issues are exaggerated?
Steps to fight oversupply!
The UAE government draws a major potion of its GDP from its real estate sector. As soon as the problem with its real estate started, it tried to fix it through various actions. Official authorities issued the order of putting upcoming projects worth billions of dollars on halt. This was a vigilant step to control the supply of property in Dubai. Besides that, they ordered to cancel numerous projects. Government in collaboration with the banks also slashed the general mortgage rates to tempt more buyers to the market.
In order to attract foreigners for making real estate investments, government also extended its multiple visa entry option. The impact of these serious steps could easily viewed on Dubai real estate sector, since many foreigners owing to the lowest prices started to invest in the sector during the previous year. Despite the fact that the sector was returning to optimism and better times were predicted in 2012, we daily read depressing news about Dubai property market.
Facts behind oversupply!
Many experts believe that the oversupply issues are exaggerated and the reality is quite different. The demand of Dubai properties is increasing tremendously owing to the large influx of the foreign investors in Dubai. Over the last quarter of 2011, the prices of Dubai properties have grown by 2.3% as showed by the price index of Knight Frank. The fact is that the demand of the quality properties in prime locations is surpassing supply. Especially the high quality of life offered at prime communities Dubai Marina and Jumeirah Lake Towers is tempting astute investors to invest in their properties.
The data shows that Marina Dubai is the most searched location on the internet by the property buyers and tenants alike. The occupancy rates are 94% and 97% respectively in ‘The Waves’ and ‘Marina Terrace’ in Dubai Marina. Moreover, occupancy levels are 91% and 95% respectively in ‘Ocean Heights’ and ‘Emirates Garden’ respectively. This indicates that the demand of the high end residences is all time high in Dubai due to extra ordinary value of money which these investments offer to the people.
The prime residential real estate is recovering but the properties in secondary locations are still struggling hard to achieve higher occupancy levels. The plan of the government to add new supply in stages is expected to bring some cheerful news about Dubai real estate in the coming months and experts are desperately waiting for that time.