Even though we have already entered the month of May, it is still not too late to go over what 2014 holds for the real estate market in Dubai. In this post, we will list down the major trends, current performance, and the long-term outlook for the region’s property market:
A bubble in Dubai’s residential market was feared owing to unsustainable and speculative investor behavior in late 2013/early 2014. However, there are several factors that can prevent the expected bubble:
At the close of 2013, there was a lot of economic buzz surrounding the Expo 2020. But while there will be a positive long-term impact (increase in hotel and retail sectors), there will be no direct, notable change in local real estate because of the Expo. Speaking of the hotel sector, this is one segment performing strongly in the UAE.
Dubai’s property market started off in 2014 with the same strength as it did last year, especially in the residential sector, with rising home prices and rents. The real estate industry will also benefit from the GDP growth during 2014 (4.7% as per the Department of Economic Development), specifically in sectors like transport, trade, and tourism.
Here are some stats to consider:
As mentioned before, home prices soared as 2014 commenced and many predicted that the rise will sustain throughout the year. But currently, prices have started to fall. In fact, even properties in central locations have experienced a price cut of up to 20%. This may be mainly due to the following reasons:
Starting from 1st May, the two runways of the Dubai Airport will be closed for construction and refurbishing. Already there has been a confirmed rejection of more than 25% of incoming flights, which among other things means there will be fewer customers coming in this summer.
The season itself explains why the property market may be experiencing low prices. Summer months are the hottest, schools are off, and then there is the month of Ramadan. Economic activity will obviously slow down.
However, this is not expected to last long, and prices may start rising again before the end of the year. Both investors and customers should take advantage from this short-term opportunity.
If we keep it restricted to Dubai’s residential market, the long-term outlook suggests that property prices may even triple over the next 5 years, as Dubai aligns itself with other international hubs. This spells opportunities for both developers and consumers who want to upgrade their lifestyle.
One of the emerging (but effective and reliable ways) of investing in real estate is crowdfunding, and 2014 has also witnessed the growth of several crowdfunding platforms. Humming Realty- the fist realty crowdfunding platform in Dubai- for instance, has been launched this year, offering people to invest in some of the best properties in Dubai, with as little as AED 1,000.