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Real estate prices in the UAE have grown significantly and steadily over the last few years, fuelling fears that another property bubble is set to burst.
However, the lessons learnt from the previous boom cycle have seen steps being put in place to prevent history from repeating itself.
Off-plan property was the major reason behind the boom in sale prices back in 2008. It has since been approached with a fair amount of trepidation.
Investors, both commercial and residential, are generally cautious about buying off-plan property mainly due to some developers’ inability to meet handover dates in the past.
As such, developers need to offer significant incentives, i.e. attractive payment plans and timely delivery, to investors to restore their confidence in the off-plan property market.
Investors today who are determined to purchase property in the country are now seeing off-plan properties as good value. Reports reveal that off-plan developments, mainly in Abu Dhabi (e.g., developments on Saadiyat and Reem Islands) and Dubai (e.g., projects in Business Bay, Mohammed bin Zayed City and Dubai World Central) are drawing investors from near and far.
Meanwhile, unlike in the previous boom cycle, the input of supply has been more gradual for both the commercial and residential property sectors.
Real estate consultancy and research firms reveal that there is no oversupply issue in the UAE as the country’s yearly residential stock is enough for the current population and employment growth. The country’s commercial and industrial property sectors also remain strong.
• Off-plan property supply gradual to prevent another bubble
• Despite a fall in overall transactions, off-plan sales increasing
• Property buyers now viewing off-plan real estate as good value
Source: Nicholas Baker, Special to Properties
The writer is a freelancer