Neighbourhood Watch: Slowdown in rental market may be a temporary phase

Over the past few weeks we have not observed any real slowdown in the local real estate market with respect to demand for good properties such as compounds, buildings and land. Inquiries are coming from local sources as well as the rest of the GCC.

There is a feeling of confidence on the part of an investor looking at the rest of the available products in Dubai and the demand appears to be more serious than in the recent past. Perhaps the present conflict has proven to be a catalyst for investors who previously were taking their time making decisions and now prefer to move forward.

These investors may be seeing potential changes in the area and would like to capitalise on certain opportunities with banks, interest rates or just good deals available now which might not be tomorrow.

There is a definite slowdown in calls for rental properties across all sectors, which is hopefully a temporary response to the conflict. We saw a negative response to Desert Storm a decade ago but within a few months there was a turnaround and the real estate industry was once again in boom mode. The period immediately following 9/11 showed a downturn in the market but this was very temporary and did not last long enough for any major negative affect.

Unfortunately this conflict is showing a more dramatic response and the rental sector has been significantly depressed for over two weeks. We are not seeing any response by the landlords to drop their rents, as it is not a matter of negotiation but simply a lack of clients. There continue to be an adequate number of calls for the lower end of the market but the middle to luxury sector is suffering.

There is a slow down in demand from expatriates to buy properties either for leasehold or freehold, and again this seems to be the result of concern for the security of their investment.

Those who have already purchased are not showing any signs of panic but new clients seem to have put their decisions to a holding pattern. Potential purchasers are most definitely out there and recognise the fact that Dubai has some wonderful products along with a variety of buying options.

It is a matter of time before we can provide a more accurate prediction of what people are going to do with respect to their investments. Many believe that with the peculiar behaviour of the present stock market in general, they feel safer in property and verbalise overall confidence in the future of Dubai.

A recent demand for short term furnished accommodation appears to be developing in the middle to lower end of the market. There is no pattern as to the area in demand as there has been insufficient time in which this can be ascertained.

Over the next few weeks it will become more evident as to the way the market in general will go, but for the moment the foregoing are a few of the early signs already present.

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The author is UAE-based Managing Director of Better Homes, LLC