If this is the year the city recovers, how will it affect you?
A replica of the Taj Mahal four times larger than the original. An underwater hotel. A 5 sq km complex of homes linked by canals. The world’s biggest mall (again). A crocodile park. If you wanted any proof that Dubai’s economy is back on track following the financial meltdown that shook the world in 2008, one need only look at the list of ambitious new developments announced over the past 12 months. Many of the proposals have had seasoned expats whispering ‘it’s like 2006 all over again’, with a look of both excitement and desperation in their eyes.
There’s no denying that the new developments – sublime, ridiculous, beautiful, thrilling and garish as they each might be – will be a marvel to watch evolve in front of our eyes. But for those who lived through the sky-high property prices of Dubai’s 2006-2008 boom (a time when general inflation alone soared to 10.8 percent by 2008), a sense of anxiety may be somewhat justified. With this recent recovered economic confidence, Dubai has also seen property and rental prices soar – most of the sales and letting firms we spoke to reported that property prices in prime areas have soared by as much as 25 percent over the past 12 months, with rental prices rising by up to 15 percent. ‘When 2008 hit, I thought it would take six years to recover,’ says Priyesh Patel, a sales director with real estate firm Aston Pearl. ‘Yet it only took three years.’
So why such a swift bounceback? A key factor in Dubai’s resurgence is confidence. Where investors were panicking a few years ago, the string of recently announced new developments (a string of which we’ve listed, right) act as a global symbol that Dubai has defiantly recovered its mojo. ‘The announcements have started a belief that the city is back on track after four years of doom and gloom,’ says Mario Volpi, head of sales and leasing at property consultant Cluttons. ‘But I don’t personally believe they’ll all get built.’
Dubai has also seen a recent surge in population, creating fresh demand for a limited supply of property. While some residents chose to hastily pack up and leave when the crisis hit, employers have been steadily recruiting in recent years, with Dubai’s population now having soared to an estimated 2.1 million for the first time. Meanwhile, the political instability in neighbouring countries and the fallout from the Arab Spring has been credited with making Dubai increasingly attractive to investors based in the Gulf. ‘There’s a lot of money coming in from Iran, Syria and Egypt, because [investors are] worried about keeping money in the banks,’ adds Patel.
‘But property in Dubai is a safe investment.’ So, for the fearful seasoned expat, how far will this recovery go? Will rent prices reach the astronomical levels of 2006? ‘I don’t think there will be any future spikes, because Dubai has hopefully learned from the past,’ adds Volpi. ‘“Steady as she goes” is the way forward. It’s like green shoots – if you water them too much, they will die.’
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Samih Chacra Jan 09, 2013 10:40 am
I fully agree with what it is said about the Confidence in Dubai's economy. My wife and I visit Dubai every year , at least once, and have lately purchased two flats, definitely due to the said factor in the property.and the excellent Government's management of this area of the economy.