How high can Dubai property prices increase?
The Dubai Government is doing its best to keep the real estate property constant prices in order to be able to control everything, so that it won’t go out of control like what happened with other UK Countries eventhough they are hugely developed.
A number of major project announcements starting from the Dubai Waterfront mini-city near Jebel Ali to the 250-tower Dubai Business Bay in the downtown, appear to be a cause to keep the market well supplied to avoid conflicts between demand and supply and therefore to prevent rentals and capital values going too high and everything will be in hands and constant.
The last thing Dubai Government wants is for their country to become an expensive place to do business.
Moreover, there are some signs and proofs that price increases are now more controlled and that the re-sale market is cooling down. From the rental cost perspective there has been some market resistance to price increases, though often people are accepting smaller accommodation to meet their budget.
However, there is still a time-lag between these massive new developments and the demand for property. The accumulated supply is not matched by a high level of demand.
With this supply and demand position it is impossible not to conclude that the cost of buying property and the cost of rentals will both continue to rise at least until this new supply begins to become available.
Of course, by then the demand for property may be bigger again, and the whole supply/demand equation will have shifted in the direction of permanently higher prices.
This has already happened. Some local estate agents thought the Jumeirah Beach Residence project might flood the market with apartments, but few hold that view today and prices for the original buyers are three times what they paid.
Eventually the supply and demand position in Dubai will go out of hands, and then the market will undergo a correction. But with rental and capital values rising at the same time, as they are currently there is nothing immediate to worry about.
Only when rental yields go down, like what happened in the UK over the past few years, should buyers start to become concerned. There are homes to suit every budget and everyone’s needs should be satisfied, from a young bachelor, seeking a functional, and studio apartment to a millionaire seeking a grand and exclusive mansion.
New homes: The Dubai property market currently comprises a majority of new homes, so the local developers will be able to provide you with pricing information at the launch of each new project, 2-3 years in advance of its completion date.
Pre-owned homes: Naturally, as time progresses, the secondary residential property market is taking shape in Dubai. Already, there is a large and active real estate sector to handle private sales. As well as finished homes, it is possible to transfer an uncompleted property between owners, and there is a flourishing market for those who wish to take earlier occupancy.
