Dubai Real Estate Vis-à-Vis Global Downward Trend

What would be the fate of real estate in Dubai in the current context of global economic crunch? Following is an analysis of Dubai’s real estate market with respect to the larger economic arena.

At present, Dubai real estate is experiencing the pull of the following dynamic forces:

• Lower mortgage rates as compared to those prevalent in other booming real estate markets of the world. This has made properties in Dubai real estate market more affordable to buyers and investors.

• A general slowdown in business is being experienced by Dubai’s real estate sector these days.

• With more and more properties nearing completion in Dubai, the supply of real estate will rise in the emirate by the end of the year.

Learning from parallels

Dubai real estate and UAE economy at large can be compared to Hong Kong of the 1900s. It witnessed a boom at a time when developed economies in the like of the UK and the US were experiencing a crunch.

The question that rises to mind is whether Dubai real estate and UAE economy are able to sustain the pace of growth and development even in face of global downtrend. In 1900s, negative real interest rates had helped Hong Kong; and in 2007, the same forces are at play in Dubai/UAE. So much so that buying real estate in Dubai is quite a lucrative option for investors from around the world.

Dubai real estate could sustain the global fall

Of course real estate analysts keep calculating the fate of Dubai’s real estate sector, the fact remains there are multiple points of view on the matter. If we go by parallels again, no one should forget the fall of real estate prices in Hong Kong some years ago. But Dubai real estate is way ahead of its Hong Kong counterpart back then.

2008 is looking like a gloomy year for global economy as a result of the following factors:

• ongoing credit crunch

• US mortgage crisis

The economy of the United Arab Emirates has been on the road of growth for the last five years or so. This comes as stark contrast to US economy where real estate prices and the value of dollar have been experiencing a slump.

The coming months are indeed promising for Dubai real estate. At the least.