The growth of the Real Estate market in Dubai

The growth of the Real Estate market in Dubai is protected from whatever fluctuations taking place in oil prices based on short and medium term. In fact, it is estimated that higher prices will only spur on the growth to higher speeds. The value of some of the Real Estate projects in GCC, Iran, and Iraq has already crossed $750 billion. Nearly 33% of this is concentrated in the United Arab Emirates with Dubai contributing the maximum. This figure is higher than the combined GDP in the same region, which is lower than $700 billion. According to expert estimates this trend will continue despite the fact that the oil prices are expected to fall in the short and medium term.

One key thing to note is that so far the growth of Dubai has been consistently defying all analysts. Since the past 5 years all sorts of experts have been saying that it is about time the Real Estate market in Dubai stopped being so profitable but so far the bubble has not burst. Though such growth has never been sustainable before no one is able to explain why it continues to thrive in Dubai. The GCC has the 17th largest economy in the world comprising of 500,000 high-income earners and a GDP of $525 billion. The total ½ trillion dollar economy creates more than $500 billion in revenue that is used for investment. This volume is believed to boost the Real Estate and construction sector in Dubai.

With a growth rate of 25% per year the UAE GDP is expected to reach anywhere from Dh 500-900 billion by the year 2010. The UAE has already surpassed Egypt as the 2nd largest economy in the Arab countries. It is now second to Saudi Arabia, which is going through its own explosive growth period. The projects in UAE total at around $225 billion with Dubai holding nearly $125 billion.

The population of Dubai is also expected to go from the current 1.1 million to 4 million by the year 2017 and by 2020 it may exceed 5 million. This growth is expected to put a great strain on the infrastructure. The government has already spent $2.5 working on the road network covering 9,600 kilometers.

Dubai has always been the most popular place to buy investment property in the UAE because of its visitor friendly policies. There are many investment opportunities available to people in Dubai. In the past 2 years other emirates have also noticed the profitability from Real Estate development and they are also beginning to contribute to the growth of the region.
Because of the heavy investment in the tourism, infrastructure has further encouraged the growth of the Real Estate market.

Of course real estate analysts keep calculating the fate of Dubai’s real estate sector, the fact remains there are multiple points of view on the matter. If we go by parallels again, no one should forget the fall of real estate prices in Hong Kong some years ago. But Dubai real estate is way ahead of its Hong Kong counterpart back then.

Source: Al Bawaba
Posted: 08-04-2008 , 14:40 GMT