- Those who say oversupply was the major reason behind Dubai real estate crash, are wrong. The global crises slashed the profit margins of various companies which led them to shrink their employees. The laid off expatriates working in Dubai left the rental properties vacant while those among them who owned the properties, sold them as distressed properties. This distressed selling accompanied with the higher vacancy rates brought down Dubai property prices by more than 60%.
- The recovery is expected to gain momentum in 2012 due to the expected growth of Dubai economy by 4.5% to 5%. However, in order to bring stability in the sector, limited supply is being added in stages and mainly in the prime areas of Dubai. The supply of new offices has been slowed down in the Q1 of 2012, since vacancy rates of offices are already high in Dubai.
- The residential sector is outperforming its commercial sector. Villa market has been stabilized to a significant extent while apartments’ market is still struggling hard to cope up with the oversupply issue. Rentals as well as sales prices are inching up in all the prime locations where quality of life is high while secondary locations like Discovery Gardens and International City are still suffering from declines.
- City wide rents of retail properties have remained stable during Q1 and stood at AED1.885 per sq m. The retail market is becoming two-tier, since the malls like The Mall of Emirate, and Dubai Mall are seeing increase in rents due to high sales made by the tourists while the older and the less popular malls are still facing rental declines.
- The hotel sector of Dubai has been performing well since the final quarter of 2011. The results of Q1 of 2012 shows the recovery is gathering pace because occupancy levels have increased to 86% due to high influx of tourists. These occupancy levels are at the same levels which were recorded during 2007 and 2008. This means this sector has almost roared back to its original position.
- Dubai Marina is currently the best performing development in Dubai with respect to high occupancy levels and increase in rents. It is the most sought after destination by the tenants and investors alike due to higher ROI and better quality of life. The rents in Dubai Marina have inched up by 10.4% during the Q1 of the following year.
- Mortgage market in Dubai is continuing to facilitate investors and uplift the demand of Dubai property market. Multiple mortgage products with flexible terms and conditions like lower mortgages rates are being offered in the market. On the other hand, landlords are also offering incentives to the tenants like no security fees, no advance periods, rent-free periods and monthly or two months payments.
- The earnings and share prices of the developers in Dubai shows that the worst has been over but still nobody can assume small spurts of growth as full fledge recovery. It is expected that market is very near to hit the bottom level and it would take some time more before selective stabilization takes the shape of full fledge recovery.
Dubai Real Estate Market – Some Unique Facts!
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