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.
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.
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.