A luxury apartment in the Dubai Marina can still be bought for around half what you would pay in a European city like Copenhagen and others. But are prices too high or too low by international standards?
This heroic case is faced by many potential buyers. And perhaps the main problem is not an immediate one of supply and demand but trying to get a vision of the future with Dubai as a very different sort of city.
The price of property in a city depends wholly on the income of its residents, and the supply available to satisfy that demand. Now supply and demand can be adjusted over time by the commercial decisions of developers and will always move towards an equilibrium situation. More important is the actual spending power of a city’s residents and visitors. If they are poor then landlords can not charge high rents if they want tenants. Similarly developers can not sell highly priced property to people who can not afford it, and potential landlords will not pay high prices for long if prospective tenants have little income.
A comparison between Dubai & Other developed countries
| With respect to: | Dubai | Other Developed Countries |
| The price | Four times lower | Higher |
| The yield from rent | Assure 8 to 9.5 % rental yield | Not more than 5% |
| Tax or capital gains tax | Not present | Present |
| The inflation | Property boom has just shot up in Dubai and it will definitely last for the next five years. | There the boom has already reached a mature stage and we cannot expect a lasting hike in prices. |
