To a lover of this emirate, the present happenings in the Dubai stock market and construction and housing sectors could only be described as horrific. Though the doomsayers would always maintain an ‘I told you so’ attitude, the truth is that the market is showing a response to two factors. One is the long term negative trend that has crept in since Dubai’s economy has been affected by the recessionary trend that has enveloped most nations of the world in the wake of the financial crisis in the USA’s housing and banking sectors. The second, shorter term fiasco has resulted in a negative stance emanating from the news that the Dubai Government was unwilling to bailout Dubai World from meeting its debt obligations. Most Western nations feared the worst, translating it to mean that the emirate of Dubai was itself in danger of bankruptcy, since it had quite likely overextended itself in its quest to be a major tourist attraction. When you have everything from the world’s tallest building to the world’s most expensive hotel, the world’s only ice skating rink built to withstand a desert climate, and scores of palatial buildings, villas and marina apartments that make one wonder how much money has been sunk into these projects, it is inevitable that people think you have exhausted your resources, no matter how deep your pockets.
But few in the world know that Dubai is among the world’s top reserve holders of foreign exchange, and this can enable it to withstand any crisis. In addition, Dubai World itself has the capacity to make good its debt repayments in case of emergency by selling off part of its assets in properties and companies all over the world. Now Abu Dhabi has finally come forward and pledged US$10 billion to help Dubai World pay off its debts. The news has energized the stock market once again, and the property sector is expected to follow suit.
So is this a good time to capitalize on Dubai’s property market and Buy Property in Dubai or Buy Villas in Dubai? In short, is it opportune to Buy Dubai Property of any kind? Some analysts would say yes, others would say hold on because a further drop is expected. Still others would state that it depends on your holding power and the place in which you have invested or plan to invest your money. For example, villas and marina apartments are still seeing rising prices and a lot of activity in the property sector. The outlook for hotels and city apartments meanwhile is a bit muted, as the recent unemployment has led to an oversupply of available rental units and reduced rents in favor of the tenant. In fact many people have moved from previously crowded living quarters in unhygienic conditions on the outskirts of Dubai to more comfortable living areas within the emirate. Meanwhile salaries have been slashed too in some sectors owing to reduced business.
There are some analysts that still maintain that we have not seen the worst of it yet. They point out that a lot of developmental projects are slated to be completed by end 2010. If we factor this in, the oversupply of apartments will be almost 33 percent compared to the 10 to 16 percent that we see now. That, say analysts, would be an exciting time to capitalize on the property sector. Others plan to wait till mid-summer 2010 since March-April is traditionally the time when the property sector has been at its lowest historically. But almost all property sector analysts are sure that a rebound will occur in 2011. We’ll just have to wait and see.
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