Dubai’s stand in the Realty cycle
Despite inadvertent instances occurring to Dubai in the realty cycle, the city looks crippled in the initial times and yet has recovered from the trauma instantaneously. For those who are aware of the crisis in the realty cycle, it is very much known that it occurred via an agenda. Though such crises leads to jarring impacts, it never brings down the country to face a retreat.
Ultimately the core idea is demand and supply, important components too play a vital role in driving the market forward or rearward. For instance, policies of government towards foreign direct investments can increase the market to develop.
Inspite of Dubai having faced recession, it has regained its previous status. There are many traits of a recession such as unemployment, reduced consumption, reduced investment on buildings, factories and machines, downfall on property price required for economic activity. A raise in population will always raise the demand for goods and services. This elaboration has accelerated the government’s interference through reducing the interest rates. Dubai has experienced this scenario in the year 2008-2010.
A step-up in the demand and reduced costs on investments, businesses are inflated by companies. They take more people, come up with new factories and own more machines. These factors increase the demand for property where the financial growth occurs. There is a drop seen in the demand for the real estate sector since companies engage the vacant buildings and people think of moving in to previous residences. This phase was witnessed in the years 2011 and 2012, and Dubai has been one such places to recover from the hard times due to its plan of action with respect to the substructure of the city.
The passage from the phase of recovery to expansion has lead individuals to buy or rent most of the buildings. During the expansion phase, the moving in gets rampant and vacant structures come to a minimum which leads to owners increasing the rents. These instances tells us that increased supply will fulfil the demands and reduces the impact on rents and property prices. At one point of time, the curve meets a spot where rents are sky rocketing in a fast pace. There are chances that the property price may contemplate the future rent prices than the current market condition.
Among rising markets, UAE is one of them that has a full fledged stand on developed markets and will uphold a balance between demand and supply. Dubai has come up with extraordinary planning with respect to expansion and investments. This in turn creates job opportunities in Entertainment industry, Health industry which will gradually create demands for housing. Though balancing the demand and supply to the fullest is dubious, Dubai will anyway come up with perpetual growth plans to support the supply.
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