Dubai Property News

Dubai Property market is a bubble waiting to burst - Survey

Most respondents of a survey conducted by ArabianBusiness revealed that the booming real estate market in Dubai is just -a bubble waiting to burst.

The prices in the emirate have gone very high during the recent years, due to shortage in housing, and the rising cost of construction. The Egypt-based HC Securities Brokerage mentioned that the real estate market is all set to be the second most expensive in the world, just behind West End of London.

About 25% of the survey respondents said that the market does not provide a real long-term value and is “obviously going to decline”, referring the inflow of new housing to the market.

About 20% of the respondents had a qualified positive outlook and said that the property boom is expected to continue, but may be limited to certain high-end areas like Dubai Marina.

Less than 10% of the respondents are of the opinion that the marked will continue to be “everyone’s preferred place to live.” The main drivers of inflation in UAE, is believed to be the realty market of Dubai and Abu Dhabi, which was 9.3% in 2006, and is expected to touch a 20-year high of 12% this year. Although, Dubai and Abu Dhabi have lowered their rent caps to 5%, in an effort to curb the inflation and control the market, analysts say that the rent cap has little to do in controlling the market, and only increasing supply of housing will reduce the prices.

Even HC Securities had mentioned the same sentiments. The firm said that the caps have hardly addressed the surging inflation caused due to rapid increase in rents across the region, and predicts that the rents will increase by another 20% during the current year.

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