Aspen Woolf On The Fluctuations In Dubai’s Property Market Since 2008
It’s been ten years since the economic woes of 2008 that saw the biggest challenge yet for Dubai’s property market. Since then, the market has gone through various transformations as it continues to develop along with the city itself.
What kind of challenges did the imploding of the property bubble bring to Dubai’s market? In this blog, we look at the challenges that have been overcome as well as the biggest achievements of the industry over the last decade.
Sustainable Real Estate Market
While the immediate impact of the property bubble bursting in 2008/2009 were harsh, ten years on we’re looking at a more sustainable real estate market in Dubai. It boasts a more robust regulatory and legal framework and is generally much more mature.
One highlight of the last ten years is the development of the Real Estate Regulatory Agency (RERA), which started in 2007. Since then it’s come a long way in developing a standardised regulatory framework that protects investors and end users alike. It also helped to restore market confidence across the board.
The introduction of consumer protection measures has also helped the market to mature. The most notable of these is the introduction of mandatory escrow accounts for all developers involved in selling off-plan.
A significant amount of legislation has been implemented to further clarify the relationship between off-plan investors and developers should either party default. RERA also now has powers to cancel projects and there are guidelines in place concerning the process of liquidation.
A rental index came into force in 2013 and tenancy contracts were standardised in 2017. These are all positive steps forward in terms of tenant protection. Other legislation that legally distinguishes between residential and commercial property leashes is being discussed.
Regulating The Industry
Dubai’s real estate industry was very young prior to the crash, and this has meant regulating it from scratch. When you compare this to the UK’s property industry, which has had centuries to develop and refine legislation, you can see how challenging this is.
The city’s property market is evolving fast and the efforts of RERA and the Dubai Land Department (DLD) are really paying off.
Improving Market Transparency
‘Form A’ has been implanted to help with Dubai’s transparency problem. This is the standard contract mentioned above between broker and seller. The DLD is also planning to provide more up to date information to the market, which will help the drive towards transparency.
Restoring Investor Confidence
The main challenge after the crash of 2008 has been to restore investor confidence in Dubai’s property market. The city has introduced measures to make sure the market cannot overheat in the same way, and these have proven successful so far.
All the steps taken since 2008 have led to a solid foundation for the industry and should help to take the city to the next level over the next decade.
Dubai’s real estate market in 2018 is much less speculative than it used to be. Investors are making measured decisions through the analysis of annual returns, and there is an increase of end-user demand. There are fewer speculative investors which has led to a more stable market, which means it’s a more attractive market.
The Youth Effect
Over recent years, younger people have settled in Dubai for the long term, meaning that more young people are prepared to invest in property. This is positive for the future of the market, and the city’s economy as a whole.
Future plans including the focus on tourism, developments and infrastructure in the lead up to Expo 2020, will continue to drive demand in the city for property. Despite the slight decrease in rental yields over the last few years, Dubai’s real estate market is widely thought to be one of the most reliable, attractive and sustainable markets in the world.