Friday, February 22, 2008

UAE Property Market Boom

UAE has seen an unparalleled boom in its Dubai real state sector and has been an epicenter for property investment in the entire GCC region. One of the most competitive countries in the world, UAE is widely known as a business haven owing to its business-friendly atmosphere and laws. The key factors to have catapulted UAE’s property market to the current soaring heights are influx of expatriates, thriving tourist industry, and proactive government policies.

Of all the emirates of UAE, Dubai has been the most active player in the real estate sector among others. Dubai has witnessed the fastest upward trend in property prices and rents because of the increasing demand/supply imbalance – huge demand and short supply has resulted in the astounding price hike for the existing and ready-to-move-in properties. Continuous delays in the supply of new property have triggered a sharp increase in all the available residential and commercial properties. However, a look into the development projects which are afoot in Dubai, both residential and commercial property oversupply can be foreseen after a couple of years. The supply deficit signals huge opportunities for the developers to cash in on the prevailing real estate situation.

Despite quite a good deal of supply, office space is still facing shortage in Dubai. The demand for high-end office spaces is multiplying as the businesses go on to mushroom in the city, but the supply isn’t just adequate so as to satiate the demand. The flourishing tourism industry, of UAE in general and of Dubai in particular, has not only caused the boom of local hotel industry, but also resulted in large-scale retail developments. Shopping has become one of Dubai’s most potential lures and the sprawling malls are soon to become overcrowded if the proportion of population surge and development projects remains at the current level.

The struggles to undo the demand/supply mismatch are afoot throughout UAE and newer development projects are being initiated. Moreover, governments are drafting legislations that are more business-friendly in order to boost investors’ confidence in the market. Granting foreigners the right to own property in many of UAE’s emirates has also contributed to building up investors’ confidence in the region.

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