The Impact of the Financial Crisis on Dubai’s Property Market

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The fact that Dubai and to some extent all of the Gulf States have been affected by the financial crisis is beyond doubt now. What is being considered is how deeply has the economy of Dubai been affected and how long it will be before the emirate is back on its feet again.

One thing is for sure, that the fallout of the financial crisis has driven a dramatic shift in homeowners buying decisions and has had a significant impact on the recovery of the global property markets.

Figures from a recent survey carried out by an online estate agency shows that the financial crisis has quite significantly affected homeowners buying decisions. The results show that almost two thirds or 60 percent of homeowners felt that the financial crisis has affected their property buying decisions, while 33 percent are waiting for some sort of stabilization in property prices before they decide to re-enter the real estate market.

Analysts have opined that before the financial crisis there was a general shift away from buying real estate by homeowners as properties and assets continued to rise at their fastest pace in over two decades. In this scenario buyers were being priced out and properties were not being sold.

The financial crisis had the effect of accelerating this trend by reducing property prices but creating psychological confusion in buyer’s minds. Some expected the prices of real estate to fall while others expected them to rise. Still others think that the prices will remain stable in the short term.

Some analysts look at the demand and supply situation, others psychological factors, and some the overall economic situation. But by far and large, the expectation is that the market will continue to remain depressed with a 30 to 50 percent further fall expected in prices before a recovery occurs. In any event an economic rebound is not expected before mid-2011, say the majority.

Indeed, a good number of the locals did not believe that the financial crisis had affected them at all. As many as 15 percent of those polled gave a straight ‘no’ answer; another 13 percent answered ‘not really’ and a further 12 percent said that they were ‘not at all’ affected by the crisis.

The survey found that there was a segment of the market that has not been affected by the financial crisis. This segment mainly relates to people sitting on a lot of cash at the moment, such as foreigners or those that see the housing market trends as cyclical. For these people there is no reason not to buy property even in this scenario.

Other more cautious investors and companies have tried to make a move to Abu Dhabi, Qatar or some of the other Gulf States. They are those whose interests have been severely affected by the property slump in Dubai. They lost contracts, workers and money in the slump.

In reconsidering their investment strategy, the owners and management of these firms probably felt safer setting up business in a place like Abu Dhabi or Qatar. They are in the same region, can cater to the same clients and are more confident of their investment remaining stable in emirates with a more stable environment with conservative approach and consistent policies.

Whether you are looking at Dubai real estate, property for sale in Abu Dhabi or Abu Dhabi real estate, be sure to visit Dubizzle for information on the latest trends, not only in Dubai or Abu Dhabi but all across the UAE.

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