Price Index Cuts to Revive Investments in Dubai Property Sector

Earlier, Dubai property developers were reliant completely on off-plan sales in order to finance their future and other onging projects. At the time of property boom in Dubai, the demand for these off-plan properties was further promoted, however, the global crunch has made the finances extinct and the value of the off – plan property market virtually disappeared. This further leads to project cancellations and construction delays. As there were loan to value reductions and higher interest rates the disturbances in the real estate sector gets aggravated. Those developers who have good financial fundamentals could only carry their projects towards completion in this current situation.

In the current state, the prices for Dubai properties are quiet uneven and there are few takers for off-plan units. Moreover, the property sector is now dominated by the buyers there was an oversupply of units coupled with distress sales in order to raise liquidity for mortgage repayments are affecting sales price adversely. There are communities where distress sellers are disposing off properties. Currently foreign investor’s interest is attracted towards ready-to-move-in villas and apartments. Moreover, now the prices are being decided on the basis of quality of construction, the amenities to offer, accessibility and project location.

As per the market analysis done, there is still a strong demand in mid-level segments such as International City where prices have fallen by 25 to 30 percent. The prices have been corrected to realistic levels and the emirate has suddenly become a hot market of affordable properties. Moreover, these properties are not only affordable but also guarantees high returns in the long-term. According to the estimates the prices could continue to drop, whereas in Q4 it is expected to climb up again.