Interest in Dubai’s real-estate sector had spread far and wide by the mid-2000s. Even people who had never visited the ascendant emirate were pondering an investment, many believing it was a one-way bet. The insatiable appetite to invest in Dubai real estate fuelled the launch of ever-more grandiose schemes.
Projects will have to be targeted towards end users, with a long-term tie to Dubai
The market looks very different now. Prices have plummeted as a result of a wave of lay-offs in the emirate as development work on new projects has dried up. The Real Estate Regulatory Authority (Rera) has cancelled, or is in the process of cancelling, 495 of the 980 projects it has registered in Dubai.
Reviving Dubai real estate is a key challenge for the government. The sector, along with the construction of new real estate, had become a major contributor to Dubai’s gross domestic product.
But it will not be an easy task. Developers are learning that now projects will have to be targeted towards end users, with a long-term tie to Dubai, and in central locations. Out-of-town projects run the risk of languishing in the desert as developers allow investors to swap into city-centre schemes. At least they will be out of sight.
Even some developments in central Dubai may not be able to attract buyers given banks’ reluctance to fund mortgages and a huge oversupply problem from projects that are already nearing completion.
Ironically, despite the oversupply in the number of units developed, many find their needs are still not met. Businesses find it difficult to get the space they require in central areas, and individuals often struggle to find accommodation within their means and close to their place of work.
If Dubai’s real-estate sector is to recover it will be through finding a way to satisfy those potential customers.