Dubai Property: Now is not a good time to invest

A new report has shown that the property market in Dubai is likely to remain weak and is unlikely to start it’s road to recovery before the latter half of 2010.

Dubai has suffered in recent months with buy confidence taking a severe blow despite several high profile developments. Many Dubai property investors are reported to be struggling to make their payments and this has resulted in falling property prices. According to a recent report by Egyptian investment bank EFG Hermes, some Dubai property prices have fallen by as much as 50% from their peak last Autumn.

Despite this, rental market values are still strong with rental prices holding fairly steady.

Many overseas property investors had hoped that the strong rental demand coupled with a weak property market would provide them with an excellent opportunity for property investment. However the latest report showing a gloomy outlook for the Dubai property market means that buyer confidence is unlikely to return any time in the near future and prices may fall even further in the next few months.

EFG have commented that they expect to see more distressed property transactions over the next 6-12 months and this may further weaken the Dubai property market and prolong any rut that it has fallen into.

The lack of investor confidence also means that many Dubai property owners are now looking to rent their properties rather than sell and this means a glut of rental properties are likely to appear on the market in the coming months. The increased number of properties is likely to drive rental prices down and this means a decreased ROI for any property investor.

In short, the Dubai property market outlook is currently not a particularly attractive proposition. With both property prices and rents expected to fall in the next few months, although many Dubai properties look to be bargains, the team at believe that any prospective investor would do well to wait for 6 months and then re-evaluate the property market to see if the Dubai property market is showing a more positive outlook and therefore represents a better property investment opportunity.

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  1. From Dubai Developers Struggle To Pay Bills | Buying Foreign Property | Nov 11, 2009

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