Dubai Creek Area 2

When Will Dubai Property Prices Recover?

Following the price crash which happened over one year ago at the end of 2008, many are wondering if Dubai will ever recover.

Now at the beginning of 2010, Dubai prices are rock-bottom and there many different views as to what is likely to happen. One view envisages Dubai prices remaining low for 2 to 3 years before a recovery that would see prices gradually returning to the peak 2008 levels by 2015. This is summarized in the chart below and is the most likely outcome in our view.

Dubai Property Price Trend Jan 2010

 

However, others think that recovery may actually start at the end of this year with prices growing again in 2011. Generally most forecasters do not envisage prices going down even further from the current very low levels.

We think that Dubai property prices will eventually recover in 2 to 3 years because of the following reasons:-

1. Overall the UAE is a very rich country and much of the investment in Dubai is from Abu Dhabi which has massive reserves surplus in Trillions of dollars (most western countries have deficits). The UAE still has the 5th largest oil reserves in the World. Compared to its size, it is the highest in the World.

2. Massive immigration is continuing into UAE from East & West creating REAL DEMAND from real people

3. Tax Free. No income Tax, No Capital Gains Tax.

4. Remains on target to be a world Financial, Business & Trade Centre

5. On target to be the world’s No.1 Tourism Destination with customers attracted from all over (East, Middle East & West). Overall, set to be the World’s No.1 City in 15 years. Emirates Airline and the excellent facilities at Dubai Airport is helping greatly with this.

Here is our current advice:-

 Ready Property Owners

You should not resell your property. Currently prices on Dubai property are very low and these can only go up. Unless you need the money desperately you should not sell – just rent it out and wait for the property prices to go up over next 3 to 5 years.

 

Off-plan property owners

If your developer is financially strong, they are likely to build the property eventually. However, if they are weak, they may not survive the downturn and you need to explore exit options. However, with many developers, this is not possible as the developers are no longer around or are in serious financial difficulty. If you are offered a switch to a “ready” or “nearly ready” Dubai Property at a reasonable price – then take it. Do not switch to another off-plan project.

 

New Buyers

Property prices are at rock-bottom. So now is a good time to buy Dubai property. Our advice is that you should buy “ready property”. Do not consider “off-plan” as there are too many risks. Although prices are not rising at present, they will start rising in a 2 to 3 years and may actually rise very fast to the 2008 peak levels when confidence returns.

5 thoughts on “When Will Dubai Property Prices Recover?”

  1. I purchased an off-plan property from a developers in Ajman. The property has not been built yet. What are you recommending to customers like us who are stuck with a property that does not exist. I have paid the developer 30% for the studio apartment and do not know if it will ever be built.

  2. Many of our own customers have been affected in a similar way both in Dubai and Ajman. The developers seem to be in financial difficulty and are not building or making refunds. Most have stopped communicating with customers. Some have offered a switch to alternative properties. However, these properties are off-plan as well, and so not worth considering.
    Our advice is that if they offer a switch to a ready property – with the same payment plan, then you should accept the offer. Otherwise your should leave your claim for refund – even though the likelihood of getting the refund is low.
    As prices on ready property in Dubai has dropped so much, we ourselves, independent of the developers, are offering such customers who are so affected, a switch to a ready property in Dubai with the remaining funds. In your case, 30% of your funds are stuck with the developer. For the remaining 70% of your funds, we can offer you a ready property in Dubai directly from us, which has higher value than you original Ajman property, is already rented out and will come with a payment plan so that part of the property can be paid for via the rental income. We do not have the power to obtain refunds from these developers, but switching to a better ready property whilst still keeping your claim alive is an option you could consider. The likelihood of getting refunds is low and in our experience legal action has not been successful.

  3. In answer to your question in the blog heading – NO – Dubai property prices will not recover. I disagree with your opinion. My view is that no-one will ever be interested in investing in Dubai again.

  4. I think prices will recover sooner than everyone thinks. In some areas near the planned Metro, there is already price increases.

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