Dubai Property Suffers Badly in Global Downturn

As much as I hate to say I told you so, I have to in the case of Dubai. Several months ago I was writing articles advising against investing in Dubai property, because the level of new development was certain to cause over-supply problems, and price falls. For a while after I wrote these articles, I received regular comments telling me how much prices were growing, but soon, the comments stopped. At the time I didn't know property prices in most places would be dropping as well, but in Dubai prices are dropping more rapidly than most countries.

Dubai property prices have dropped by as much as 40% in some areas, and in the current climate further drops cannot be ruled out. The sheer volume of new development in Dubai, even after the US began to feel the credit-crunch, meant if the slump spread to the rest of the developed world, which hardly anyone doubted it would, then Dubai, reliant on foreign investors would be left with thousands of units unsold. This would cause prices to plummet.

This week the Dubai Property Society is lobbying the Chamber of Commerce to reconsider its policy on visas for residential and commercial freehold property owners. The association wants the restoration of full visa rights urgently, to help combat the property downturn. They believe restoration will encourage more foreign property investment in Dubai.

HE Hisham Abdullah Al Shirawi, second Vice Chairman of the Dubai Chamber of Commerce & Industry, said it was clear that the real estate sector is facing dire challenges and immediate action is needed to address the situation.

He advised the Society to present a unified voice with which to address the Government and relevant authorities to show clear unanimity on the steps to be taken including collaboration between the property sector and the banks to address issues of liquidity and investor confidence.

These are the kind of steps that are being taken throughout Europe and the world, to try and make finance more readily available for property and other types of investment to stave off the downturn. But in Dubai's case, I doubt they will bring foreign interest back to the same levels it saw before the credit-crunch, certainly not before the global recovery begins, which means the oversupply problems will remain.

Therefore, just as I recommended not investing in Dubai property several months ago, and I won't be recommending it for sometime yet.