Despite lack of transparency Dubai off plan property remains popular

The Dubai property prices have surprised many commentators with their continued rise in the past year or so, with prices having increased around 40% this year alone and a 79% in total in the past 18 months. Prices are clearly reaching a level where they will soon start to level off, but what is all this about a property crash? Should investors and potential buyers be looking towards other property markets such as Qatar or Ajman? And if a property downturn is so imminent, why are people continuing to purchase freehold property here?

With as little as a 5% deposit people can purchase Dubai off plan property, so it is perhaps little surprise that is has remained a popular option with investors. But it is for this reason that many believe market prices has become artificially inflated by speculation, with many buying properties with minimal deposits, and quickly selling them on at a profit without ever having put much money down on the property. Cleary this has started to cause some problems in the property market, and as a result developers Emaar and Nakheel, and perhaps soon the Dubai Government also, have moved and introduced regulations to ensure owners hang onto their properties for longer, before being able to sell them on.

This alone has brought a large amount of added stability to the market, and should ensure the market does not overheat and see prices crash. Another area of worry has centered around the oversupply of freehold property on the market. We have been hearing for a number of years now that we where heading for a large oversupply of property onto the market place, but if so, where is it? Such worries have failed to materialize. First we were told 2006, which was then pushed back to 2007, and then to 2008. But with an ever growing population and continuing property delays, the oversupply has yet to materialize, with 2011 now being given as a possible date. However it is here that the lack of transparency comes into play in the local Dubai property market.

With the two main developers of Dubai linked to the Government, plus a lack of detailed information on the socio demographics of Dubai’s growing population, it is hard to gain any really concrete information in this regard. With such Government influence, it would be possible for the ruling powers to simply step in and delay projects if necessary. But should this be a large worry to buyer? With already high occupancy levels and demand still high, many would argue no.

So with market now looking to have stabilized with the introduction of the new regulations, and the future outlook quite positive, it is perhaps no surprise off-plan property has remained so popular.  

Are you looking to buy or sell Dubai property? We have a large selection of re sale and off plan property available contact us on the link below.
 

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