Negative global factors weigh against local upturn at Cityscape Dubai
Posted on 25 September 2011 with no comments from readers
Three years ago and the Cityscape real estate exhibition in Dubai featured the 1km-high Nakheel tower and a redevelopment of Satwa both projects quickly abandoned in the property crash that started soon afterwards as the global financial crisis brought Dubai’s flow of easy credit to a halt.
Nothing so bold is likely to be on offer next week when Cityscape opens its doors. Indeed, with the global economy facing its most difficult autumn since 2008 there will be those who ask are we about to see more of the same in Dubai real estate?
Another crash?
That is almost impossible because of the scale of the local property crash since 2008. There has been a recovery, with more buildings finished off and completed than might have been imaginable back then. But the market is still subdued and prices much lower.
ArabianMoney recently noted a 10-20 per cent recovery in villa prices in The Meadows (click here). But this is an isolated case with a limited supply of certain villa types in this particularly sought-after location behind the Dubai Marina towers with low community fees and excellent facilities.
If you look around the rest of the city, and increasingly Abu Dhabi, the market is amply supplied with 20,000 units for sale and 29,000 for rent, according to Dubizzle.com. As more villas and especially apartments are completed this total is growing.
On the positive side Arab Spring liquidity has found its way into Dubai property this year with expatriates leaving Bahrain and Syrians fleeing their country adding to new residents. There has also been an associated boom in Dubai tourism with many parts of the Middle East unsafe, helping hotels, restaurants, retailers and Emirates Airline.
Arab Spring downside
That said the Arab Spring has hit many regional trading businesses based in Dubai whose flat 2011 sales will be a disappointment to headquarters in Europe and elsewhere which planned for a far better performance.
Of course, the major global headwind for UAE property is the mounting global financial crisis and the near recessionary economic climate in many parts of the world (click here). The UAE as in 2008 as the regional trading hub is the most exposed economy to these global problems.
Oil prices, which have been very strong – arguably too strong and one cause of the return of the global economy to recession – are also now falling and that is seldom good news for the UAE.
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