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The situation as regards off-plan sales is far more clouded. Some rumors in the marketplace suggest that off-plan sales by developers this autumn have fallen short of expectations. Certainly the pull-back on new launches suggests this market is not what it was in Dubai, and some re-sellers are struggling to find buyers.
Delays, one year or two?
However, delays to the completion of new units continue to exert pressure on the existing housing stock which has to accommodate more and more expatriates arriving in Dubai. Optimists reckon that in one year's time new housing supply will be sufficient to meet demand, but more cynical souls think two years may prove a more realistic estimate.
Everything is working against fast completion of projects: there are more labor disputes, traffic is holding up the delivery of building materials and construction costs are soaring.
This factor will make a big difference to rentals and also property prices. For the longer upward demand pressures remain in place then the higher rents and property prices will go. Indeed, the property price rises seen this autumn are very modest by comparison to the 25-50% rent rises in Dubai this year.
The fact that higher rentals make buying a more attractive option has not been lost on home buyers or investors. There is an ongoing conversion of tenants to home owners.
Property Law imminent
Two more factors working in favor of this conversion process are the likely imminent Dubai Property Law and greater competition in the local mortgage market.
The former will eliminate buyers' fears about the legality of ownership, while the latter should ensure that it becomes cheaper to own a home, and keep the lid on mortgage payments if US interest rates rise further.
For the doomsayers who have long predicted a crash for Dubai property, the day of reckoning is put back yet again, while those who bought early have made strong equity gains on their property and have saved a lot of those exorbitant rental payments.
Peter J. Cooper
