Dubai real estate market shows signs of overheating

DUBAI: Concerns have been expressed in many quarters that the revived real estate market of Dubai is showing signs of overheating.
By: IS Real Estate
 
 
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Al Barsha - Dubai - United Arab Emirates

AL BARSHA, UAE - Oct. 25, 2013 - PRLog -- This is evidenced by the jump in average rental costs by almost a third over, in the past 12 months. This development comes after almost five years when debt-laden property bubble burst leading to down hill side in property prices.

Of course there is a renewed economic confidence in the Emirate well visible in the trade, tourism and service sectors. Dubai is still a haven amid regional unrest with companies hiring more thanks to the business hub status of the oil-rich region.

A report by a reputed property consultancy noted that the residential sector is showing ‘signs of overheating’ with rental and sales prices rising rapidly. The average residential rentals shot up over 30 percent in the past 12 months and in half-yearly figures the hike was 14 percent.

Officials warned that rental growth is outpacing wage inflation and will start impacting Dubai’s competitiveness if this trend at current levels sustain for long”.

Caution also came from the IMF saying that the government should prevent a return to “boom-and-bust” condition as the non-oil economy of the United Arab Emirates grows is only growing at four percent, driven by Dubai’s core service sector.

The real estate consultancy advocated enforcing a real estate fees to mitigate speculation in the property market.

Price Inflation
The real estate consultancy noted that there had been widespread growth in the residential sector driven by prime properties including the world’s tallest tower and Dubai’s man-made Palm Island triggering price inflation in less-popular areas, even in developments located close to the desert outskirts such as Jumeirah Village and Dubai Sports City.

However, there is hope that a spate property launch in recent times will ease the constraints in demand for popular districts.

Read more here:http://www.is-re.com/blog/dubai-to-build-worlds-largest-c...

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