Buy Abroad News

08 Dec 09

John Reilly Asks Will The Dubai Property Market Ever Return

A lot has been written in recent weeks about the demise of the property market in Dubai and much of it appears to paint the desperate situation that has emerged for Dubai property buyers, as a sudden shock development (excuse the pun). For many years I have found it difficult to reconcile the huge amount of development in the region with the lack of people actually looking to live in Dubai.

Yes it’s great when, as an investor, you buy an apartment off plan and then resell at a profit before it is ever completed. But does anyone stop to ask who will actually end up living in the property? Or, more importantly, will anyone ever live in the property? At some point the reselling of a property stops and someone has to occupy it.

I have heard stories of people buying whole floors of an apartment complex when it is released, and reselling in a matter of weeks for a tidy profit. Now we find vast amounts of property lying empty and the price index for Dubai property tumbling at a rate of knots. It bears the classic hallmarks of all supply and little demand and ultimately this was always going to be the case in a property market driven predominantly by investment rather than residential demand.

Yes the Dubai property market will recover not least because it is such a fantastic destination, but first demand needs to catch up with supply. For anyone taking a long term view, then it could be a shrewd investment, especially if you are a frequent visitor to Dubai and can enjoy your purchase.

My personal opinion is that we have not seen the bottom of the curve yet, especially with uncertainty in the air about how Dubai based developers are going repay huge debts.