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The real estate prices in Dubai are unlikely to stabilize during the
next five years, in case the rent-cap is not lifted, and if the
government does not take initiative to implement measures that could
contribute in improving the supply market, say experts.
A study of the Dubai real estate sector by the Dubai Chamber of Commerce and Industry (DCCI)
revealed that demand and supply of real estate will reach equilibrium
only in 2023, provided, the government does not interfere or bring in
new policies.
The Director of DCCI's Data Management and
Business Research, Dr. Belaid Rettab, said "Equillibrium is when demand
meets supply, and the prices remain stable."
Imposing
rent cap, apart from delaying the process of stabilizing the market,
will not be able to address price hikes too. Being supporters of
liberal business, we do not prefer to have rent caps. The simplest
solution to prevent price hikes is to bring in more supply to the
market. The government, apart from supporting development of mortgage
sectors, will also have to arrange finance facilities to developers so
that they could build more, Rettab said.
The DCCI study revealed
that the property prices have increased by a 10 percent cumulative
annual growth rate in the medium term. The long term increase was 4
percent, which translates itself into an average price hike of seven
percent, equivalent to the current rent cap imposed by Dubai government.
The
DCCI study revealed that the government policies will positively
influence income, population, cost, financing availability, tastes and
preferences of buyers and speculation of future prices that could
contribute to increase in demand.
The increase in supply will
depend on the financing, production inputs cost, construction
technology and expectation of future demand. |
