Thursday, February 07, 2008

Dubai realty market likely to be world's second most expensive, in 2008

The shortage of housing supply, coupled with unprecedented increase in realty prices in 2008, will make Dubai realty market, the second most expensive in the world, only next to West End of London, reports HC Securities Brokerage.

The Egypt-based brokerage, in its Economy Watch Bulletin, reported that increasing growth rates have enabled expatriates with the means to rent houses at high rates, and the situation is quite unlikely to be resolved this year too, as the market would continue to experience shortage in supply of housing units.

The caps by Government have been unable to address the surge in inflation caused due to rapid increase in rents across the region. The HC Securities state that with the GCC rents forecast, further set to increase by 20% this year, the rents in Dubai were capped at 15% in 2006, and the rates are lowered to 5% this December.

"However, the increase in rent rates is backfiring greatly on the rate of inflation. If the main reason behind mounting inflation is skyrocketing rent rates, we note that limiting the rent prices do not seem to have solved the problem," said HC Securities.

1 comment:

sunil said...

this is not hard to believe. much like manhattan/new york and mumbai india, anytime a small piece of land is crowded it only drives prop values higher. the question is how wil the declining job market affect the prices going forward? is this sustainable? i would imagine not personally. the fundamentals of real estate simply do not support it.

no jobs = no discretionary income = no spending = companies dont sell products = shares suffer = market drops.....

demand declines = people cannot afford expensive real estate = prices pressured downwards