The weakening of the Dubai property industry has led to a decrease in investors and buyers. Many believed that it needs a supply control, while some think that it is crucial to understand what the younger generation and newer work teams need. Investors are eager to know how the market will be this coming 2020.
Dubai property experts said that the real estate prices are at the same level in 2009-2010, which offers better opportunities for new investors in the industry. According to research, since the industry is at the bottom of its cycle, there is a chance that prices might fall more in the short term.
Expected to remain stable until 2019 ends are the prices and rentals. How it will bounce back in 2020 will depend on how effective the newest initiative was done to increase the demand and control the supply.
There is a declined in the rentals and prices by 2% in the third quarter than in the previous quarter. An increase in sales in the middle of 2019 is also seen, compared in 2018. It is also shown that prices will improve in the future.
How does the government deal with the Situation?
The government’s program, like the Golden Card citizenship permits or longer visas, has calmed the rules in foreigners investing and putting up a business. The abolishment of Central Bank’s 20% cap on property lending as part of total deposits is said to increase the demand and weaken the effect of the downturn. The anticipated increase in economic activity because of Expo 2020 in Dubai will likewise strengthen the investor’s trust.
But there has been less effort to limit the new supply. Because of this, a new organization for Real Estate Planning plans to present a strategy on how to get the right balance on supply and demand.
Increase in Supply
The boost in supply is felt in business and residential areas. The average level of completion for residential in Dubai for the past 3 Years is estimated to 20,000 houses per year, while over 60,000 properties are set to be completed in 2019. There is also a boost in supply in the retail area where it is expected to be over 600,000 sq. m. as compared to 233,000 sq. m. per year for the last three years.
Although not all projects proposed to be completed this year, definitely 2019 will end the year with an increase in completion both in commercial and residential sectors.
How the Dubai property market will be able to get the right balance between the supply and demand is yet to be determined. The acceptance that there are steps that need to be done to control future supply levels effectively is an important step. The strategy builds it, and they will come, been proven very effective in Dubai in the past, but it needs to be reviewed and produce a well-balanced market. If this can be achieved, it will need more control over the supply level.