Dubai was in a plunge when it saw the Emirates’ economy in a severe financial crisis back in 2012; the year Mayans probably declared to be the world’s last. As comical as that sounds, the reality was quite different. While the world had just seen the inflation resonance of 2008 which, to this day, has scarred the economy of United States, Emirates was on a down low due to the financial crisis of the Middle East that took over the entirety of the sub-continent.
To put it bluntly, as much as this was negative news, this also was taken as a massive opportunity towards FDI (foreign direct investment) and inflow of billions of dirhams as investment in real estate. Why did that happen? Millions of tiny cogs are credited in running this machine we call the Middle Eastern economy. This brief article looks into some insights on Dubai’s booming investment in real estate.
The Benefits of Lucrative Decisions
The entire economic system works on timely decisions and effective business propositions. Dubai is a new city built upon trillions from business magnates and while the city is still thriving on cash inflows from mighty investors, the time has come when Dubai caters to a larger market. And by a larger market, we mean smaller investors investing in more affordable land ventures and the reason for that is Dubai’s real estate market to be in much shallow waters than it was a while back.
Construction is one aspect of Dubai that has brought in a humongous boom in the city’s economic progress and investment. Since the entire nation depends on newer ventures, tourism and construction are two main sectors of Dubai’s economy that have really pushed Dubai’s gross domestic product to new heights. It has made Dubai one of the largest and fastest growing economies not only in the Middle East but also around the globe.
The boom in real estate transactions is due to megaprojects like the Palm Islands, Dubai Marina and many similar projects. The real estate market had seen a boom back in 2008 but after the plunge, it picked up again in 2012. 2015 and especially the last quarter of that year saw a huge inflow of property transactions. But that was just the start. As of March, 2016, the final month of quarter one, these numbers have nearly doubled, as speculators say.
Property Drop and Rise to Transactions
Even when there are price drops to real estate in Dubai and many investors look at this as an opportunity, there is a chance that property prices will continue like this throughout the year until 2017 when there actually will be a chance to gather some return on investment.
The oil prices have reduced by 70% in the last two years. This is one of many reasons for the real estate price drop however, the price reduction isn’t as what it was expected to be with such a considerable dip in oil prices in so little time. The internet media is divided into two analyses; at one end speculators tell real estate transactions have dropped while a bigger chunk is saying, due to the lucrative and continuously growing construction ventures, transactions have risen. Better at that, they’ve doubled!
Dubai’s Property Market: 2016’s Speculations
This factor has also reduced rent prices considerably. The drop was seen to be 10% percent year to year and now, by the start of quarter two of 2016, the prices are landing rock bottom. That’s about 3% per quarter. Another reason is the expo of 2020. Although it is still quite a few years away, the preparations have already started. It is speculated that there will be an inflow of millions of tourists and visitors due to the expo. This will mean a massive cash-flow to go only to rents and property.
Another fact, and this is supported with numbers, is a forecast that the city might generate above 300 billion dirhams in real estate transactions. This is said by Dubai Land Development (DLD) chief. Recently, Dubai’s economy experienced a huge boost of a whopping 68 billion Dirhams in under 53 days. The real estate resonance started in the last quarter of last year while hitting a supreme 68b dirhams by the end of February and that’s an average of more than a billion Dirhams in a single day. This is actually contrary to many real estate experts who analyzed that the market might dip in the current year.
On the timeline scale, 2014 transactions were 218 billion Dirhams while they rose to 268 billion Dirhams in 2015. With a targeted 300 billion dirhams in 2016, this could be the biggest year for Dubai’s real estate in decades, hopefully.
Now that you know how the year in property finances is going to be, you may plan accordingly with your savings and investments. This is, we believe, a high time to start thinking on land investments.
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