Stability of the 2008 Property Market – Supply Surpassing the Demand for Dubai Properties

2008 has gained much speculation from most forum participants regarding the state of Dubai’s property market. Before the start of the year, there was a prediction that the supply and demand percentages will meet, especially once the imminent number of distressed property sales will become inevitable. Members also speculated that such an event is most likely since every market is really expected to mature.

However, most members contended that the rising cost of building materials, labor fees, and overhead expenses are enough to keep the prices up. In addition, the insufficient supply of affordable man power furthers the delay of the demand and supply curves’ meeting point. Moreover, developers are having difficulties in delivering their projects on time.

Hence, should there be a price correction? This will not really affect the long-term investments on major urban developments. Despite the city’s relatively low property prices, Dubai is poised to become one of the world’s major international cities. This is because of the tourist attractions and activities found in the city along with its open doors for foreign investments. This also means Dubai will never lose the attractiveness of its real estate market.

As the year approaches the end of its second quarter, the points mentioned above may be worth the consideration, especially while pondering on an investment in Dubai’s real estate market. In every investment, research and accurate information are necessary in making a wise decision. Thus, since Dubai’s property market is relatively new as compared to other major cities like London and New York, which had gone through various cycles, speculation is generally part of the real estate industry.

Thus, many analysts have contended speculation about the Dubai property market as being similar to “a bubble that is waiting to burst”. They have based their predictions on the strong responses of buyer’s of such Dubai properties. Hence, the steady growth of the emirate’s population is basically due to the immigrants and foreign workers who continuously visit and migrate to this amazing city. Aside from this, the market is not affected by the current slow down of the US economy.

As predicted by the Egyptian Investment Bank, prices should continue to rise by 5% up to 10% due to the shortfall of housing supplies. Analysts predict that this trend will continue until the end of the year or until the prices swing back in favor of buyers. This is because over 120,000 units will be delivered in the next two years. Moreover, a predicted cumulative decline in the prices should be around 15% up to 20% between 2009 and 2011.

Yet, despite such predictions, property buyers will not be completely deterred in purchasing properties in Dubai. In order to keep their property’s market value, buyers should focus on locations that are presumed to be in continuous demand until 2009 and beyond.

For more discussion about Dubai’s property market check out the Dubai Forum.



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