It was not long ago that investors and market experts were predicting, with a great amount of hope, that the spiraling rents would start to level out. With huge increases in rent of around 20% in the past year alone, the costs of accommodation are really starting to take their toll on Dubai residents. Sadly, it doesn't appear to be the end just quite yet as supply is still set to fall short of massive demand levels for property.
It's hard to believe that only a few years ago the cost of renting a four bedroom villa was the same as renting some one bedroom apartments today. The booming economy and popularity of the Emirate has led to an influx of expatriates who can still earn a better living despite a definite price hike to long time residents. This has no doubt influenced the inflation of freehold property too, as people see paying a mortgage on a property more worthwhile than paying the same amount in rent but not contributing to ownership.
While buying property in Dubai remains a viable option for many expatriates, the development of freehold property has also vitally contributed to the shortage of rented accommodation. Delays in construction have pushed back the release dates for many projects, the residential units of which have been bought off-plan. With buyers no longer able to move in on time, this means that there are people who need to rent that shouldn't. It was recently announced that the Palm Jebel Ali, a major development by Nakheel, has pushed back the completion of infrastructure to 2012 due to the extended time required for land reclamation, a process that proved to be more time-consuming than thought on the Palm Jumeirah. Just some of the teething problems associated with such a new property market I guess! While there are many projects that seem to surpass construction expectations (the Burj Dubai tower should be highly noted), the fact that just over 14,000 new units are available for rent when the forecast amount was closer to 40,000 shows that delays are persistent across Dubai's entire property sector for the moment. Good news for greedy landlords, bad news for needy residents.
Moving back to the experts though, they predict that supply and demand should meet around 2010, but in the meantime, will the costs of renting and buying property in Dubai continue to increase at the rates we are currently seeing? Is that actually a feasible scenario? Let's all hope otherwise!
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