2013 Real Estate Market Outlook in Dubai and the UAE
A View by an Australian Real Estate Agent
The current outlook for the real estate market in the United Arab Emirates has improved a great deal over that of the previous few years. A lot of this is due to all segments of the real estate market in Dubai currently experiencing a vast recovery, to the extent that prime office rents are rising for the first time since 2008 compared to previous years. The current bursting of the real estate market bubble in 2008 dropped these prices in Dubai as much as 65%, which makes rental prices much more affordable to those in the past. Actually up to 70% of property purchases are made in cash. This makes it very difficult for the government to regulate the market's growth. Most experts remain optimistic, as they watch over Dubai's market making a broad recovery. Even though regulations are not yet in place to avoid another recession, they do not foresee a repeat of 2008 in the near future. The real estate market considered by most real estate agents is expected to continue its broad recovery during the next few months and well into the rest of 2013, though growth approaching an economic boom is not expected for this year.
A number of financial experts have identified several major trends which are expected to determine the UAE's market for the rest of 2013:
- Dubai's market is expected to display a return of investor confidence. Factors driving Dubai's market gains include the UAE's economic growth, increased employment, safe haven status, improved property pricing and rental performance, a large number of new real estate project announcements over the past six months, and the UAE Central Bank setting new mortgage caps.
- A number of factors will limit the rate of development within the UAE. Off-plan sales, IPO bonds and bank loans barely support the current rate of growth. This means most developmental funding will come from private money and overseas cash investors.
- Much of the foreign funding in 2013 is expected to come from Asia, mainly Chinese and South Korean investors.
- 2013 will see a greater concern for health and safety, with occupants making demands and legislation ensuring the adoption of best practices. This favors a best-value vs. lowest-cost approach to investments. A vast improvement on the past.
- UAE government will continue to influence the market's growth with initiatives such as mortgage caps, and stimulus packages which are expected to improve the economy and the real estate market.
These current trends will support the widely-held view that the UAE's real estate market will see a huge recovery in 2013; a good, stable growth, that, if not an economic boom, will not result in a dangerous market bubble like that of 2008.