There are many factors that affect the price of property but the biggest single factor that has influenced the Dubai market over recent times has been supply and demand. At a time when the majority of units are still under construction, we have seen an incredible level of demand for all types of properties; from apartments to villas and warehouses to office towers.
When the freehold property law was introduced, the Dubai property boom was born. Attractive launch prices along with unique and inspirational projects such as The Palm Jumeirah and The World made Dubai an investor’s paradise. Speculators looked for quick returns by capitalizing on an untapped market, expatriates bought somewhere to live and holidaymakers looked to these shores for a second home.
Ever since, demand has continued to increase, pushing prices up with it, providing investors with fantastic returns, both in terms of capital growth and leasing revenue. Such increases have spurred more people to buy here, creating further demand and driving prices up.
The massive influx of people, driven by Dubai’s positioning as a major business hub for the region and a luxury holiday destination, has created an insatiable demand for property. All new residents need a place to stay and in the same way, multinationals need business premises. The pace of growth means there hasn’t been enough property to go around and therefore, any completed property available for sale or lease has been at a premium rate. The second biggest factor affecting the supply shortfall, and therefore prices, is delivery delays. In many cases, construction has taken far longer than was ever expected, adding further pressure to an already strained market.
