Friday, September 24, 2010

Dubai property prices, rents to ease further in short-term

The rents and property prices are likely to soften further shortly, revealed the Dubai Chamber of Commerce and Industry, in their report recently.

The Economic Researcher at the Dubai Chamber, Ehsan Khoman, said that the demand-supply dynamics are favoring over-supply, given the significant volume of construction projects over the past years.

The study also revealed that the real estate market in Dubai has focused more on high and ultra-high end segment of the market. With low confidence levels and subdued demand, the prices and rents could dip further, he said.

But, the sector will recover in the medium to long term. In the medium term, rental yields and property prices are likely to get stabilized, with growing confidence levels and recovery signs, Khoman continued.

With the lending conditions likely to ease on lower interbank rates, and with the overall investor sentiment being restored, the prices and rental returns are predicted to return to pre-crisis levels, he said.

Further, the government intervention has given the much-needed strength to the market. The study pointed out actions taken by Dubai Land Department and Real Estate Regulatory Agency (RERA).

Issuing visas linked to property ownership are also vital, as property investors and homeowners are now permitted multi entry visas into Dubai for minimum of six months.

The study emphasizes that few regulations are necessary here, particularly, when the developer is permitted to retain 30 percent of contract value, in case a buyer cancels an off-plan purchase. Therefore, off-plan buyers, seeking to cancel a project, will have to forfeit 30percent of the total value of the unit, he pointed out.

According to Khomam, further measures in this regard can boost investor confidence and revive overall market demand. In order to enhance the level of transparency, professionalism and overall market confidence, few policy recommendations need to be made. Such regulations can improve transparency levels, professionalism, and overall confidence in the market.

The study actually revealed that the latest performance in the property sector, coupled with dropping prices of properties, have brought relief to residents and businesses alike. For those with insufficient capital, this is the right time to make return on investment.

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