Dubai Residential Property Still A Good Prospect Despite Warnings Of A Downturn

In 2002 the UAE announced that freehold Dubai residential property could be bought by foreigners. An incredible buying spree by locals and foreigners alike, saw Dubai residential property skyrocket during the ensuing years. Colliers statistics revealed that apartment properties jumped 100% during the four years from 2003 & 2007. In the other key segment of the Dubai residential property market, new villas, the price increment was an incredible 226% during this period. Rent prices too have seen astounding success with rentals of Dubai residential property increasing between 25 & 40% according to Arab investment firm EFG-Hermes’ statistics.

Why Dubai Residential Property Will Remain Strong

Several reasons for the stability of Dubai residential property have been put forward by experts. Most importantly is the massive increase in population. During the past decade, Dubai’s population has doubled; and it is set to double yet again during the decade to come according to an article in December’s The Business. A large part of this population increase will come from expatriates who typically purchase Dubai residential property both as a residence as well as an investment.

Another important factor keeping Dubai residential property prices in good health is the slow rate of completion of projects. According to the EFG-Hermes’ report, 100,000 residential units were expected to come on stream in 2008. However, only a very small fraction, have actually been completed. This has been attributed to rising construction costs, labour shortages and increased government regulations on developers in the Dubai residential property space. Insiders also point to developers deliberately slowing down completion of projects in order to sustain the remarkable success of the Dubai residential property market.

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