Where Next for Dubai’s Saturated Property Market?

The situation in the Dubai property market right now is tenuous to say the very least – we have just had announcements from some of the leading constructors that projects such as Palm Jumeirah are up to six months late and we have received warnings from the National Bank of Dubai that inflation is spiralling upwards and creating economic risk.  Combined with these factors is the news that there are substantial waiting lists for commercial and residential space in Dubai as reported in the International Herald Tribune this week and one has to ask oneself ‘where next for Dubai’s saturated property market?’

On the one hand the news from Dubai’s CB Richard Ellis office that commercial occupancy rates in Dubai are running at 103% and that there is a long waiting list for space in premier commercial premises such as the Dubai Financial Centre is exceptionally good news – high demand and limited supply is the perfect economic environment for increasing profits for the owners of prime accommodation in Dubai after all...but rental rates, despite having supposedly been capped, are actually spiralling upward, possibly being kept artificially high and squeezing more people and more businesses economically and restricting their financial potential. 

Now this is not an environment that anyone willingly chooses to put themselves in as a property consumer.

But Dubai’s unique – isn’t it?  It’s the only location in the UAE worth talking about, it’s the only emirate with a property market to speak of and so no one has much of a choice? 

Well, that may be what the owners of property in Dubai are banking on so that they can continue to charge ridiculous rental and leasing rates, but it is not actually the case.

An increasing number of astute companies and individuals lured by the inimitable taxation and lifestyle benefits afforded them in the United Arab Emirates are choosing to look beyond the perceived borders of Dubai and break out of the invisible restrictions created by the magnificent Dubai marketing machine and they are realising that beyond Dubai there is actually far more to the UAE.  There are affordable freehold and leasehold properties available, there is easy accessibility to home and office (exceptionally easy when compared to Dubai’s now infamous Sheik Zayed Road) and there is a lifestyle that is every bit as glamorous as Dubai’s but up to 30% cheaper than Dubai’s.

Ras Al Khaimah and Ajman are the main emirates emulating the Dubai model at the moment although it’s likely that others will follow, both Ras Al Khaimah and Ajman offer freehold ownership of selected properties to foreigners, both have developed attractive free trade zones with commercial space available and both offer the expatriate something special in terms of lifestyle, environmental attractiveness and community.

If more companies and individuals are willing to expand their horizons and look outside of Dubai’s city limits this could actually be good for Dubai’s saturated property market resulting in less frenetic activity, a stabilising of supply and demand as well as a stabilising of resale and rental rates resulting in an ease on inflation and a reduction in economic pressure on those living and working in Dubai.  It could also result in an easing in the congestion of all infrastructure thus creating an environment in which people would live more happily and more comfortably…after all the attraction of Dubai will not fade and it will not become a place where no one is willing to live, work, invest or holiday and so we think that the government has nothing to worry about from healthy competition!

Special Reports: Property News for Dubai

Dubai Investment Property Buyer Guide
Buying investment property in Dubai is a straightforward process however there are certain issues an investor should be aware of

Dubai Guide for Property Investors
Property investors in Dubai are attracted by the incredible rental yields and growth potential in the emirate’s property market currently.

Dubai Property Investment Guide
Dubai is set to continue to represent one of the best returning, relatively affordable property investment markets in the world