MARKET UPDATE -DUBAI, U.A.E.

Worldwide economic downturn brings with it the expectation of mergers and acquisitions, unpredictable pricing in the realms of the sales and rent markets and cautious lending, in a bid to reach a (supposedly) smooth road to market and economic recovery.

Dubai is no exception.

To stimulate lending in Dubai, two  major property management and property development companies have been granted by the government the right to merge which will bestow upon them a shared 70% control of the country’s mortgage market and boost the Dubai real estate sector.

Lending is still held on tight reigns in the mortgage market, whilst recovery of the property market will continue to be bound by the high rates that have been imposed (standing at 7.5% – 9%). The regulatory authorities, meanwhile, have recently intervened, formulating laws which protect property developers and shareholders under the threat of defaults and a moreover menacing, huge financial loss.

Not surprisingly, key feats within real estate strategising include scraping the barrel somewhat. A trickle of houses for sale it has been noted are put forward for auctioning by some real estate firms, whilst, although the situation is not as dire as it was in this year’s first quarter, property valuation is still dropping in some areas for the time being.

Despite the current climate, supposing that the recently identified recovery of local stock markets remains constant, and that the economic situation does not take a further turn for the worst, there is promise of recovery as far as property valuation is concerned.

Moving away from property sales, the prices of apartments for rent in Dubai have lowered as job losses have increased. This is a state which will oscillate in response to external factors such as the possibility of job creation, the employment and mobility of residents belonging to nearby cities (in response to more affordable accommodation prices), and the capital markets – all of which appear to be mutually vulnerable.

Intervention from the Dubai real estate regulatory authorities and government are crucial to ensuring the country, and in particular the property market, continues to prosper and rank highly with other key cities worldwide; widespread are plans for fiscal aid and for the protection of local markets to ensure rates of inflation return to an upward trend at some point in the next year.

According to research carried out by Hamptons International, residential estate agents specialising in UK and International sales, lettings and rental management.