Property Prices Dubious to Come Down With the Opening of Burj Khalifa

According to a leading property analyst, the opening of the Burj Khalifa is unlikely to topple the prices of the property in Dubai. The reason predicted is that an investor in the iconic tower would be more inclined towards longer horizon of investment and would wait till the market recovers.

The Director Research and Advisory Services of Landmark Advisory, a Dubai based property consultancy, Jesse Downs said, “The impact of the opening of the world’s tallest tower is also expected to be gradual with little immediate and sustainable effect on the sale prices and rents of residential and commercial units elsewhere in Dubai.”

He added, “The average owner of a Burj Khalifa residential unit is more likely withhold their unit from the market. This is usually because they are pursuing a capital appreciation investment strategy and/or use it as a second home.”

Some apartments at Burj were being sold at the price more than Dhs6900 per square foot when the prices of the property were at their peak. About 90% units have already been sold.

It is expected that there may be a short dip in rents after the handing over of the full building takes place. “This is because landlords are typically pushed to reduce rents when occupancies are low as tenants have significant bargaining power and prefer to move into a well occupied building as opposed to a nearly empty building.”

The time when the Burj Views project in the area of Downtown Burj had been handed over in the summer of 2009, a dip in rents was felt.

Downs commenting on the impact of the opening of Burj Khalifa on rents and sale prices of residential as well as commercial units of the nearby areas, said, “while we expect high vacancy rates, especially in the first year, the imminent handover will have a positive impact on confidence by simply showing progress.”

Even more interesting is the fact that the opening of Burj Khalifa has increased agglomeration of economies thereby pushing the markets towards the creation of one primary Central Business District. Downs pointed out, “The launch of Burj Khalifa could not have come at a better time. This is a clear vindication of the hard work and efforts of Dubai and the UAE.”