The most recent information relating to the property market in Dubai has hinted that recovery may be on the cards. Colliers International has reported that real estate values in the region climbed four per cent in the first quarter of this year compared to the previous quarter, but what does this mean in real terms for real estate investors?
What the Report Says
The Colliers report paints a rosy picture for property in the region and is a welcome change from the firm's report in the first quarter of 2009, which showed a 41 per cent fall in values, compared to the previous quarter.
A year-on-year increase of two per cent was also seen, but overall prices are well below their 2008 peak and are unlikely to reach similar levels for a long time.
The report also predicted that the market will be struck with oversupply issues, with 41,000 residential units becoming available by the end of the year." Demand is not expected to match the growth in supply, creating downward pressure on property prices", it noted.
A number of unfinished developments remain in the region and the Real Estate Regulatory Agency (Rera) for Dubai has revealed that it will be cracking down on developers who are stalling on new projects.
The plan will mean that Rera will be able to cancel projects that will not be completed and allow investors to recoup their money and hopefully help individuals retain some confidence in a sector that has received a lot of bad press.
Trade not Property is Key for Revival
Potential investors in the region may be interested by news that some economists are predicting that it will benefit from a resurgence in global trade. Speaking to the local newspaper, The National, chief economist of HSBC in Dubai, Simon Williams, explained that real estate was not the driving factor behind Dubai's success.
He said: "It's about the creation and export of world-class services, which is why I expect Dubai's economy to prosper in the medium term. Trade is the heart of Dubai's economy."
So, many experts are predicting that the emirate could be a long-term success for those willing to invest, but just how long before it returns to peak levels remains unclear.
- Friday 14 May 2010