'No bubble in Dubai yet'
As rents in the UAE continue to escalate, realty experts have issued out warnings of the possible impact on the sector. However, Marc Faber, the famed investor known for his often gloomy opinions on markets, has warned of asset bubbles in the US and China but does not see one yet in Dubai's property market.
Faber, who is the author of the Gloom, Boom & Doom Report newsletter, said that Dubai's property market was at a less critical phase. "I don't think we're yet in a bubble state but we had a big rise in property prices already. We have not reached the 2007 peak yet. We're not in a bubble yet, but it may become a bubble in the future.
Prices in Dubai's property market grew by as much as 40% last year as the emirate benefited from returning investor confidence. Earlier last week, the chief executive of the Abu Dhabi Islamic Bank sounded out warnings that a continued increase in rental prices would make the UAE a less competitive market.
"I think the growth in rental rates, at 60%, at 70% in some pockets, though isolated, I think that's not a healthy trend," said Tirad Al Mahmoud. According to him, "we need to see the cost of doing business in the UAE remain competitive. It is a significant driver of inflation. If real estate rents continue to rise at these levels, then the cost of doing business in this country starts to lose competitiveness."
In line with the generally positive outlook for the sector, developers have been stepping up on their new launches. Dubai-based property developer Select Group has announced a new development for the Dubai Marina area - the Residences Marina at Gate. Occupying one of the area's last remaining plots, the new development represents a final opportunity to purchase luxury waterfront property in one of the UAE's most desirable communities. The frequency with which new projects have been launched has also gone up steadily in the first quarter of this year. Damac Properties has maintained a steady release of new units at its Akoya development while Deyaar made a statement of its own with The Atria.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Residents across the country are concerned about the state of the real estate sector, especially those who have already invested in properties. While rental prices are increasing steadily and need to be controlled, most experts agree that there is no property crash in sight. We will continue to follow up on the latest analyses and reports that examine the UAE real estate sector's future outlook and will be sure to keep all our readers in the loop.