Question: Ii
Also, given that Dubai feels crowded and potentially expensive, what are your thoughts on upcoming areas in the UAE? Are places like Sharjah worth considering?
Answer: It’s easy to be influenced by others’ opinions, but it’s important to look at the facts before making a decision.
The Dubai property market has been thriving for quite a while, and this trend doesn’t appear to be slowing down any time soon. Many view this as an ideal time for speculation, but predicting the market’s movements is tricky.
While it’s true that what goes up must eventually come down, the key thing to consider here is population growth. For some time now, the number of people moving to Dubai has outpaced the number of properties being delivered. Simply put, there are more people moving to Dubai than new properties being handed over.
In addition, factors like the 10-year golden visa, investor visa, favorable business regulations, low taxes, safety, and the city’s weather contribute to population growth. This is why the city is seeing an influx of residents.
It wouldn’t be wise to claim that property prices will keep rising indefinitely. Eventually, we may see some stabilization. However, as long as migration remains higher than the supply of properties, the current trend will likely continue for a while.
I predict the market will maintain this trajectory for at least the next two years, and if migration continues at its current pace, the real estate boom could last well beyond 2027.
Other emirates are also expanding their real estate markets. Umm Al Quwain has Al Siniya islands, Ajman is developing Al Zorah, Sharjah has Arada, and Ras Al Khaimah is working on Al Marjan and Al Hayat islands.
Question: A real estate agent friend told me that Dubai’s property market is a bubble because the city is creating too much supply. As demand for housing rises, more properties are being built as long as land is available. However, if the market keeps building, eventually there could be more apartments than people or the cost of properties may outprice residents, causing prices to drop. This would leave the city reliant on the completion of projects to attract tenants. What’s your take on this? Is the market in a bubble?
Answer: The concept of a “bubble” is widely discussed, but it’s important to understand that economists typically refer to a bubble when many factors are at play.
I’ve experienced two downturns in Dubai’s real estate market: the global financial crisis in 2008/09 and the one in mid-2014, which lasted about six years. What sets this current period apart from those times is the strength of the fundamentals. The current market conditions are driven by supply and demand, with an imbalance created by the large number of people eager to make Dubai and the UAE their home.
As long as net migration continues, this buoyant market could last for at least the next two years.
While it’s true that markets can’t rise forever, if there is a downturn, it would likely be a period of stability where prices level off rather than a dramatic crash. If population growth exceeds current levels, the market could continue its upward trajectory for a longer time.
As for your friend’s view on commissions, unfortunately, there are individuals in the industry who prioritize personal gain over providing honest advice. It’s important to avoid such agents and seek reputable professionals who will guide you effectively and provide sound advice.
