The GDP in Dubai has experienced over 4% growth in 2014, quickly outpacing both the EU and United States economy. The Dubai Economic Department expects much the same for 2015. The strength of the growth pattern in the economy can largely be attributed to the massive performance in the real-estate sector.
Rental rates have ballooned to an overall 22% increase in residential and 3% incremental raises for business locations each quarter. The market values of real-estate in Dubai are currently higher than pre-market drops by 2009. The figures make investing in Dubai real-estate appear to be a safe bet.
There are factors in play that could be unexpected game changers, when it comes to making or losing money. It may include an increase in over 65,000 new residential housing units, with 80% being apartments while the other 20% are villas and townhouses.
Prime business rentals, such as Standard Chartered Tower and Emaar Square have fewer units available, forcing the new construction to begin, but the structure of new commercial buildings has not been as pronounced as residential.
The growth is still considered a comfortable number, but maintaining the balance between supply and demand will be crucial in deciding whether the Dubai market is a good risk. A market flood of vacant properties could drop the values, and if the numbers approach anywhere near the 90% reached in 2009, it will prove devastating.
Another concern is the rise of Chinese financial investments in the Dubai real-estate market. The Chinese are notorious for placing cash assets into real-estate outside the country. It may seem helpful to the country of choice, but it is not such a sweet deal if and when they decide to sell and pull out all of their invested funds.
The massive Chinese investments are part of the reason that the real-estate market is running very strong in Dubai currently. Betting on the real-estate market in Dubai could earn a lot of profits, but the benefits may be fleeting.