Dubai Property Adviser says…
After all the hype and hard work, another edition of Cityscape Global finally came to a close. Even before the event began, there was a heightened buzz surrounding the 13th edition this year; all of us read about how this Cityscape was set to be 50 per cent bigger and how it had managed to attract over 200 regional and international developers.Personally, I have to say that the event beat all expectations and truly demonstrated the upswing that Dubai’s property market has been experiencing this year. The positivism and confidence that has been reported of the market was reflected in the snazziest, tallest and most conspicuous 3D models of realty projects that were showcased at the event.
Several high-end residential projects worth billions of dirhams were launched and visitors could be seen thronging at developers’ stands for a piece of prime real estate. With many of these developments hugely-ambitious projects and residential property prices in Dubai rising rapidly, gnawing concerns over the sustainability of these increases and whether Dubai is in danger of creating yet another bubble are quite justified. This time round though, there seem to be more reasons to cheer and fewer reasons for worry.
For one, Dubai’s property market continues to be driven by solid fundamentals and broad economic trends and without mere speculation. The real estate industry is growing in line with the rest of the economy. The upward trend in property prices and demand is in tandem with economic growth, improving demographics, government spending on infrastructure development and increasing housing regulation. Key drivers such as the trade, tourism, hospitality, logistics and retail sectors are recording robust growth and creating a positive knock-on effect on the property sector.
These improving fundamentals and price growth are leading to increased confidence in the market, which are in turn, driving prices and investments.The market has also seen numerous regulatory steps to relax price increases, improve transparency, curb unwarranted speculation and flipping, strengthen the market’s framework and prevent superheating. Examples of such measures include a proposal by the Dubai government to set up a judicial committee to oversee the liquidation of stalled property projects, the decision to introduce a rental dispute centre and consideration of the Tanweer legislation, which when passed, will hold developers liable for their contractual obligations to homebuyers and investors.
The most recent measure by the Dubai Land Department to shield the realty market from an excessive price rise and speculative buying has seen the doubling of transfer fees on property purchases from two to four per cent. While the extra two per cent might get few buyers to reconsider their purchasing decisions, it is unlikely to negatively impact the rising rate of property ownership amongst the entire spectrum of end users, cash buyers and investors. In fact, it might just encourage buyers to purchase directly from developers and attract demand for property in developing areas such as Dubailand and Dubai Sports City where a huge proportion of future stock will be delivered.We’re also seeing increasing interest in mortgage products.
This reflects the growing numbers of end users and the intention to hold on to properties as opposed to flipping – signs of a maturing market.Dubai’s real estate industry has staged a dramatic comeback over the past year, recording some of the fastest-growing property prices in the world. 2011 kickstarted the market’s recovery and while double-digit gains that we’ve seen this year are great, we need to keep a careful eye on the path ahead.
After all, the only constant is change.