Construction in Dubai progressing for reasons


Building costs have dropped by more than 40 percent from their peak in 2008, giving developers a motivation to restart work now.

Drops in U.A.E. interest rates have also been an incentive to move forward on projects and collect further payments from buyers. The U.A.E.’s 3-month interbank offered rate or EIBOR dropped by more than half to about 2.13 percent from its highs in October 2008, Bloomberg data shows.

Many developers that took short-term loans at interest rates of 7 percent or more are seeking to repay those debts to get new loans at lower rates of around 4.5 percent.

Since construction costs are so cheap, it makes sense for the property developer to finish the project at the lowest possible cost, rather than wait until recovery takes place. With the current lower interest rates , it makes sense for developers to go for new loans, which they can only pay by collecting money from buyers. To do that, they must show that construction is progressing.


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