Onceagain, investorsarebeingattractedby
high yields and Dubai’s safe haven status.
Dubai’s government faced a considerable
challenge in the wake of the economic
crisis: it had to impose legislation and
regulation upon the real estate market
to prevent another bubble occuring, but
it also had to simultaeneously retain
the market’s flexibilty and allow growth
to occur naturally. The difficulty of
achieving these aims will be considerably
heightened by the build up to the Expo.
Much change will occur to real estate
development projects in Dubai, whether
current or future, as a result of preparations
for the Expo. Many projects will be brought
forward or delayed to maximise the
opportunity the event presents. On the
supply side, 45,000 new housing units
are currently expected to come onto the
market in Dubai before the end of 2015.
Real estate alone is expected to increase
the emirate’s GDP by three percent.
While construction for homes and
offices is expected to be considerable,
the lion’s share of the building will be
tourism-related, as hotels are built to
capitalise on a forecast tourism boom.
Mazaya Monthly Real Estate Report - November 2013
3
There is much work to be done before
the Expo can be hosted in Dubai. The
effects will vary from sector to sector, but
early forecasts show the real estate sector
will be one of the greatest beneficiaries.
Many market analysts predict the win will
cause tremendous real estate growth,
both on the supply-side and the demand-
side, while others caution that a second
bubble will inevitably occur, despite
government efforts to prevent it, and that
a precipitous fall-off in demand, after
an initial spike, could come suddenly,
before or after the Expo has taken place.
Al Mazaya believes tough measures
must be taken to prevent unsustainable,
short-term real estate price and
rental rate inflation, either of which
would cause long-term problems.
Bold bets will be made on Dubai real estate
by individuals and institutions alike now that
the Expo has been won, and it is therefore
important that Dubai’s government
has the means to monitor demand and
prices accurately and transparently.
