Off the wire
• Roundup: Greeks vote in historic referendum on debt deal, future course  • Xinhua world news summary at 1530 GMT, July 5  • Vietnamese swimmers eye Paralympics entry  • IPO approval not to be suspended: CSRC  • Hamilton wins third British Grand Prix title (updated)  • Urgent: "We're not there yet": Kerry on Iran nuclear deal  • Urgent: Explosion rocks Kandahar, casualties feard  • Interview: Interaction of SCO, EEU, Belt to facilitate regional development: Russian expert  • Guangzhou Evergrande smash Chongqing Lifan 7-0 in Chinese Super League  • Tropical storm batters N. Philippines  
You are here: 　 Home

Dubai property slump fears exaggerated: report

Xinhua, July 5, 2015 Adjust font size:

Fears of a substantial oversupply in Dubai's real estate market expressed by analysts may be over-exaggerated, according to property research firm Emerging Markets Real Estate Information in a report released Sunday.

The REIDIN report entitled "The Signal and the Noise" stated that fears of a sizable oversupply are unfounded as the completion rate of projects has been 61 percent in the last 3 years. "This lag could possibly lower the surplus pushing prices upwards," said REIDIN.

Global rating agency, Standard and Poor's said it expects real estate prices to plummet down by 20 percent in 2015 as new units flood the market across the Arab emirate.

With transactions down by over 26 percent on a year-over-year basis, prices have predictably followed suit, said REIDIN.

As oil prices lost over 50 percent between June 2014 and February 2015, real estate investors became increasingly cautious, triggering discussions among economists whether Dubai (with 2.8 million inhabitants) faces another boom-bust cycle.

However, REIDIN stated that the price action of Dubai's real estate market will be greatly influenced by the rate of completion of ongoing projects. If the rate falls below 60 percent we opine that the lopsidedness will cause prices to trend upwards.

However, if developers stay on course and deliver projects on schedule, the variety of options for buyers and rents will force prices and rents to fall further. This trend will vary in each individual strata according to its individual supply and demand dynamics.

In 2008, REIDIN said that when supply exceeded demand in the wake of the global financial crisis, prices were adjusted dramatically lower, and remained on a downward trajectory, until demand started exceeding supply in 2011.

The upward price incline continued till 2014, at which point it appeared as if another inflection point was reached; this coincided with expectations of supply once again outpacing demand for the year, REIDIN pointed out in its technical report.

The emirate was on the brink of bankruptcy towards the end of 2009 as the Dubai real estate sector crashed. Neighboring oil-rich Abu Dhabi bailed Dubai out with 10 billion U.S. dollars emergency loan. Enditem