The global financial meltdown from 2008 caused a freeze to a large number of high-profile construction projects in Dubai and across the world. During the past few weeks, however, many of their names have been brought back to life. Some of the most exciting construction projects announced during the property boom are the four times bigger reproduction of Taj Mahal, the four and half-years delayed Palazzo Versace, a skyscraper holding nine swimming pools and the several mile-long Arabin canal coiled around office buildings.
The current condition of Dubai’s vast real estate market could not be helped by the interest expressed in these massive projects. The emirate suffered a descent of between 60 to 80 percent of real estate value during the past four years since the collapse of the property boom. The recovery is very slow and requieres diversified efforts.
Jones Lang LaSalle projects that 25,000 constructions will be completed in the following year as builders try to revive their on-hold projects. At the same time, at least a quarter of Dubai’s residential properties are still empty.
The situation is slightly oversized in the commercial property market. For example, in the central business district of Dubai a third of the office space is not yet occupied. Bear in mind that in other neighborhoods such as Jumeirah Lake Towers, the rate of occupancy is even lower.
However, now the real estate market appears to be in a little bit better condition than before. But the grounds are not yet fertile to deal with all of the projects being put back into action. They have to be executed in a long term, stage by stage. Building should be determined by the demand.
A large number of projects have been put on hold since 2008 in the UAE. Their total worth is $757 billion dollars, some analysts estimate. This number leaves behind the subtotal value of frozen projects in Qatar, Kuwait, Saudi Arabia, Iraq and Egypt. Many property investors are unhappy, because their projects executors are still in keep of their money. Yet the constructions are not finished, while the negotiations continue.
In spite all of this, the property market in Dubai exhibits signs of rejuvenation. During the first six months of 2012, real estate transactions rose 50 percent. Though the 12 billion dirhams purchase value is 74 percent less than the 46.5 billion back in the first six months of 2008. As expected, property prices in the Dubai Marina and Downtown Dubai rose around 5 percent this year.
Villas are said to enjoy a higher demand in Dubai. As of now, villas present 20 percent of all homes on the market. Investors’ taste for homes had changed and their demands are a bit different since 2008.
The demand comes mostly from Iranian, Indian and Pakistani investors. They are attracted by the investment opportunities, because Dubai has proven its stability since the Arab Spring and the European financial crisis.
However, the reviving process could not be keep if there is no employment growth and stable population levels. The current overproduction would not stop at least the next ten more years.
On the other hand, the oversupplying could be reduced by tightened credits. According to industry insiders, at least 3 percent more credits are being given to property developers this year. However, a new string of government limitations over the lending system would be applied in 2013.