Foreign property companies operating on the territory of UAE were recently accused of causing the crisis in the property market. According to Al Otaiba Enterprises’ chairman Otaiba bin Saeed Al Otaiba, a number of such companies offered false data for a real estate study which focused on the real estate sector in the country. Some of them continue to provide and distribute false information successfully until today. Their aim is simple: They need publicity and high revenues! Therefore, they ride on Dubai’s name to establish their businesses and lure clients for their services. Even unknown until a year ago names are now in the headlines by promoting Dubai’s property prices as fast rising and property investments as extremely profitable. People usually tend to believe positive news than to consider warnings about bad experiences…
Otaiba is certain that namely untrue information was one of the main reasons that lead to the big real estate market crash in 2008, which saw property prices slid by over 60%. In addition, he suggests that the government needs to find a way to closely observe the property sector in the UAE. Otaiba explains that in this way, companies will have no choice, but to provide correct data on the demand and supply rates in the real estate sector.
The current situation of the country’s property market is a good example of the way exaggerated information affects the industry. For example, after the media was flooded by reports how the Expo 2020 will boost the economy of Dubai to unseen levels, new landlords were quick to increase the rents by even up to 30%. Even though the opportunities the Expo will offer will be explored in the coming seven years, tenants are already effectively forced to pay sky-high rents. The blow inflicted upon them is even greater given that salaries and benefits for expats and in the private sector remain the same, high-paying jobs are not that easy to find and expat benefits are less and less in recent years.
Otaiba says that it is more than clear that UAE’s property sector is now starting to recover in terms of both rents and sales. However, without a reliable information on the sector, no one is able to estimate exact numbers. As a result, experts are not able to make exact predictions even about the near future. Despite that fact, you may too frequently read in the news even about London-based property consultancies making statements and issuing press releases on Dubai’s residential market and property prices. Such reports and researches conducted by both foreign and local private companies may affect the property sector in a negative way. Otaiba states that this is due to the promotional and false information some of them continue to offer, which encourages developers to start new real estate projects. Meanwhile, investors are lured with superlatives and glossy advertisements to take loans and mortgages.
Al Otaiba Enterprises’ chairman also recognized the belief that there is a fake housing demand on the market, initiated mainly by speculators. He states that this spoils the balance in the country’s property sector. Otaiba advised UAE’s government to find a way to establish stability in the field.
It is difficult to understand why real estate prices and rents are on the rise today. For instance, the demand for new homes in Dubai has decreased due to a huge fresh supply over the past five years, and it is far from what it used to be. That is obvious from the fact that even buildings in the prime areas of the emirate continue to be partially unoccupied.
Media outlets, many of which are British, play a huge role in stimulating the market rise in the country. The property companies and greedy landlords use their “services” to successfully mislead large numbers of consumers and investors into believing that the grass is greener than it actually is.
Otaiba predicts that new property projects will continue to be launched over the coming five or seven years. He even expects a new boom, not much different than the one seen prior 2008. But, people and investors who survived then should know well that after the boom comes the crash…