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• Dubai used to be a small village where fishing and pearl diving were the major source of income. Soon after the discovery of oil reservoirs in 1966,
• The Emirate showed unmatched progress in all major sectors like business, trade, real estate, transportation and city infrastructure.
• The Emirate showed first signs of progress in 1980’s, when Dubai’s ruling family Sheik Mohammed and his father took primary steps to diversify city’s economy.
• They invested petrodollars to construct luxury real estate projects like beach hotels and resorts to attract tourists across the globe.
• Deliberate efforts of State Government, developers and investors have enabled city to become the business and finance hub in the region.
David Marsha
Why huge investments were made in real estate sector?
• Having identified its limited oil reservoirs, State Government decided to establish itself as a financial and trading hub for this region with aim to reduce gaps between East and West.
• Developing iconic real estate projects in residential, commercial and retail sector was the major part of this plan.
• Huge shopping malls, residential and commercial projects were being constructed by Emirates leading developers like Nakheel.
• After identifying the profit earring potential, leading companies and corporate decided to open their branch or even head offices in Dubai.
David Marsha
Rise and fall of Dubai Real Estate
• Spectacular boom was observed in Dubai during the era of 2002-2008
• Especially the real estate sector showed unmatched growth and progress in all sectors
• The highly cosmopolitan culture, tax free environment, luxury life style made this city an investment and lifestyle hotspot in the region of Middle East
• Iconic high-rise residential and commercial developments have enticed local and foreign investors
• After observing enormous interest of people around the world, Sheik Mohammed announced to implement the freehold property law in 2002
• Iconic developments like Palm Jumeirah, Dubailand, Jumeirah Garden
City, Business Bay and Dubai Marina dragged investor’s attention across the globe
David Marsha
• The freehold property ownership law positively impacted the Dubai property market and made investors for consider making investments.
• It had observed that major buyers were Asians, Iranian, Europeans, Russians, GCC and local buyers
• To meet the need of buyers and investors, Government kept on supplying new projects and property units
• But property market experienced a crash in 2008, due to global economic recession.
David Marsha
Major Circumstances due to global economic recession
During the recession most of the foreign companies dismissed their staff as they failed to maintain profits
The Jobless foreigners preferred to move back to their native countries
Rental property units became empty
This had badly hit the short term rental market. Overall real estate sector showed sudden fall in demand in all sectors
. Having observed decline in the real estate sector, Emirates major lenders Tamweel and Amlak stopped lending further
This badly destroyed buyer’s confidence and they prefer not to invest in emirate’s asset market
David Marsha
• Although, market was already experiencing oversupply of property units, Government didn’t stop adding new units
• This had completely disturbed the equilibrium of the market and market conditions became worst.
• According to basic economic law of demand and supply, surplus in the market lower the prices. Same thing happened with Dubai real estate sector.
• Asset prices in the city started declining in year 2008 and this decline continued to 2010
• Asset prices have fallen by 60%-70% as compared to the asset prices in year 2006.
David Marsha
Recovery of Dubai property market
• After enjoying 4-5 consecutive years of success
• Dubai property market touched bottom line in year 2008
• Later in year 2010, Dubai real estate sector started showing first sign of recovery, and started showing stability in villa prices across the city.
• .Later gradual recovery was observed throughout the market.
• Emirates banks reduced interest rates on mortgage loans whereas government diversified VISA policy to attract foreign investors
• After observing positive market trends real estate experts predicted that market will start recovery in year 2012 and soon real estate sector will achieve its original position.
David Marsha
