The stage is set for an orderly increase in property prices in Dubai
Activity in the Dubai real-estate market is shifting this summer; most of the new build property has now sold off-plan, forcing speculators and home-buyers to enter the re-sale scene.
If you want to buy a property in Dubai these days you have two choices; try and snap up an apartment in a new development that has just been released or buy re-sale by paying a premium to the original buyer who may not have even finished paying the installments yet.
The supply of property is clearly falling behind demand and prices are starting to rise to compensate. This appears to bve a deliberate policy by the developers who are concerned to see that buyers actually complete their sales before moving on to other projects. Ironically, the best way achieve this is to allow speculators and re-sale purchasers to bid-up the value of real estate and bring supply and demand into equilibrium.
Moreover the Dubai market is mainly a cash-driven one, so the effect of any rise in interest rates will only increase the attractiveness of alternative property investment, rather than hitting home-owners.
Thus the stage is set for an orderly increase in property prices in Dubai to something more in line with the international average. At present the rental yields in Dubai are roughly twice those in Singapore for instance, a comparable trading hub.
All the signs indicate that the Dubai authorities have matters under control to avoid a speculative bubble in the real estate market.
Source: AME Info business news