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Reality check on real estate prices
Rising rents are an indication of the continuous demand for housing.
- Gulf News
- Published: 00:07 August 7, 2008
Rumours of a possible property bubble burst have been quashed by two major banks in recent reports, which hinted at a possible softening and price correction in certain segments of Dubai's property market, while projecting growth in all other markets.
According to recent studies, property prices in Dubai could decline by 10 per cent in 18 months time as the demand-supply gap is expected to widen in 2010.
While this could be partly true for certain segments of Dubai's real estate market, the report does not portray the full picture. Demand for real estate is expected to drive the sector's growth for at least a few years. Property prices continue to appreciate and the fact that a lot of investors are still cashing in on 10 to 40 per cent premiums speaks of the continuous boom in the market.
Rising rents are also an indication of the continuous demand for housing. While rents continue to go through the roof, most residents are expected to invest in freehold properties. Therefore, a softening of the market could be a temporary phenomenon, if at all.
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