Dubai real estate - second most expensive in world

CONTINUED SHORTAGES: HC Securities said Dubai's real estate market was set to become the second most expensive in the world. (Getty Images)

Continued housing supply shortages and unprecedented price hikes in 2008 will make Dubai’s real estate market the second most expensive in the world, after the West End of London, HC Securities Brokerage said on Sunday.

“Accelerating growth rates have equipped expatriates with the means to rent houses at high rates, and the situation is least likely to be resolved in 2008 as the market is expected to be in short supply of housing units,” the Egypt-based brokerage said in its Economy Watch Bulletin.

Government caps have done little to address surging inflation caused by rapidly increasing rents across the region, HC Securities said, with GCC rents forecast to increase by a further 20% this year.

Dubai rents were first capped at 15% in 2006, with the rate lowered to 5% in December. The rent cap in Abu Dhabi is currently 7%, and 15% in Ras Al Khaimah and Fujairah.

“Nevertheless, the rise in rent rates is backfiring greatly on the inflation rate” HC Securities said.

"If the main reason behind climbing inflation is skyrocketing rent rates, we note that limiting rent prices does not seem to have solved the problem.”

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READERS' COMMENTS

Cant hold overvaluation.
Posted by Ahmed on Monday 15 September 2008 at 14:20 UAE time


Dubai and the GCC countries cannot hold this overvaluation for long. With oil prices heading south and a recession in the western hemisphere the vary model that fuelled the real estate fire has vanished. I can now predict that Dubai property is the most expensive in the world. There are no fundamentals left to support the current price level. Prices are already notionally down which is exacerbating the situation as sooner rather than later the developers and landlords will no longer be able to hold on to and demand current values and then you will see a slingshot effect where the decrease in assets values to fall faster than anyone can imagine.

Supply is already more
Posted by Expat, Dubai on Tuesday 5 February 2008 at 17:52 UAE time


Dubai property markets has two sides. One, 30% of apartments in Dubai Marina are vacant, properties section of the paper is growing thicker. Second, too many people are sharing villas and apartments in jumeirah, umm suqueim, simple because they cannot afford high end apartments. The so-called middle-income apartments are at such bad places with even worse finishing that no one wants to buy. Dubai is living in a dream world. No one wants to face the realty of addressing the actual demand instead created imaginery demand of super-ultra-over-the-top luxury housing!

Doesn't do much
Posted by Juleka, Dubai, UAE on Tuesday 5 February 2008 at 17:33 UAE time


Reducing rent cap doesn't do much to get the inflation down. It is also must to controll the hiking food prices, schools and hospitals fees.
The rising inflation is forcing the family man to live a bachelor life here and send their families back to country.

Dubai Real Estate
Posted by Phate, Dubai, UAE on Monday 4 February 2008 at 10:29 UAE time


Continued housing supply shortages......

Strangely enough you can drive through any location in Dubai and find PLENTY of open apartments / villas etc. Why are they open? Greed.

High rents do push higher inflation and is one of the main causes thereof. Has anyone ever considered why we pay such high prices for such ridiculous low quality homes?
No drainage, sewage problems, dangerous wiring, leaking roofs, unstable foundations etc etc etc.......

When will the government create a body that ACTIVELY ensures buildings are built according to rules (and give fines where they dont comply) and regulate cases where Studio apartments can sometimes cost more than villas....

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