Dubai winning the bid to host Expo 2020 resulted in a flurry of activity in the real estate market with developers announcing new mega-projects everyday. Taking advantage of the positive sentiment, sellers were asking for much more than property was valued at and things looked to be heading down the same route that Dubai took in 2008.
However, by mid-March, there was a noticeable drop in transactions as a result of a growing awareness on the part of buyers. At the same time, the UAE government announced a series of regulations that were aimed at controlling the market, including a hike in transfer fee charges as well as tougher mortgage lending norms.
Nicholas Maclean, managing director of CBRE Middle East, says it was a “market self-correction as it did not involve too overt a government intervention, which is what investors, particularly overseas buyers, want to see. The way that residential market has behaved in the last two quarters — when it was mostly stable or even a slight fall — represents stability.”
Since, developers have begun to take notice of the demands of end-users, focusing attention on affordable housing projects in addition to luxury options. At the same time, they have also worked on developing new areas, driving in investor interest in previously unknown locations.
It's clear that Dubai has used the year 2014 wisely, to understand the importance of being cautious. In the coming year, the most important challenge the city has to face is the over 20,000 new residential projects that will be completed. Such a significant increase in supply will serve a purpose in stabilising the market further, inducing a cooling-off effect. With its new focus on stability, Dubai has the potential to take its real estate market to the next level.