Instead of vague hints large companies promise their customers a stable and fixed rental income of about 8% pa, despite any fluctuations in the housing market, while others are rushing to implement the long-planned and newly created real estate projects in the "future city".
It’s not a secret by now that many forecasts about the significant decrease in prices and market oversupply were quite far from the reality. Against this background, Dubai authorities have even considered introducing new legislative measures to limit the private consultancies’ rights for real estate market forecasting.
Last week, the UAE's largest consultancy Reidin reported data on 2015 Dubai housing stock supply. Regardless of other analysts forecasts about 25,000 new units planned for handover in 2015 only 9397 have entered the market.
However, the developers are also guided by demand and tend to change their original plans depending on the market needs. Therefore, 2016 is expected to see further decrease in developers’ activity: no more than 31% of the planned handovers will be carried out next year, according to Reidin. This means that real estate prices have a space for growth, as the population and demand for affordable accommodation in Dubai will keep growing.
Dubai developers also add to the confidence in Dubai real estate market stability by making unprecedented offers to their customers. One of the Dubai housing market ‘pillars’ Damac company last week promised its property buyers a stable rental income of about 24% for the first three years after purchase.
There are enough good reasons for such confidence, experts say, for rental prices in Dubai stayed almost unchanged in 2015, in contrast to the sales sector. And in 2016 rentals are about to start their upward movement which is especially obvious in the commercial property rental sector. According to the latest report by CBRE, Dubai offices are still almost three times cheaper than in other world’s business capitals such as London and Hong Kong. The average cost of renting an office in Dubai is USD 1053 per square meter. The emirate took 20th place in the world cities office rentals ranking.
Meanwhile, Dubai keeps expanding and growing in many other ways. Large city-forming projects such as USD 1 billion Jewel of the Creek in Deira, start taking shape. Other sectors also keep the pace with luxury project getting advanced in the exotic residential community of Ashjar “luxury forest village” in Al Barari, and affordable housing development being launched in the wasl oasis II in order to add about 1,000 new affordable units to the market.
Thus, Dubai is facing new 2016 year with confidence enjoying all the benefits of a dynamic and rapidly developing and stable real estate market. A more detailed annual reports on the state of the local real estate market will be available soon in our new digests at IMEX Real Estate in January.