Top 10 Reason of Why Properties in Dubai will continue to Boom

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Top 10 Reason of Why Properties in Dubai will continue to Boom Empty Top 10 Reason of Why Properties in Dubai will continue to Boom

Post  umerakmal on Mon Apr 16, 2012 5:35 am

According to the US real estate and Hong Kong property analyzer, Dubai may be a next hot spot for real estate lovers. Here are some quality reasons of why Dubai will continue to boom in next coming years.

1. Dubai mortgage rates are around 8.5 per cent and have yet to adjust to the recent US rate cuts, which they have to do because of the dollar peg to the dirham. Just a couple of years ago local mortgage rates of seven per cent were available. Therefore the downward pressure on the cost of home finance is clear, and if the local mortgage market follows Hong Kong and becomes more competitive, then interest rates could go much lower, making it significantly cheaper to buy than rent. The rates of properties in Dubai are already negative due to high local inflation.

2. Rental yields in the Dubai market of 7-10 per cent are abnormally high by international standards. Rents are unlikely to fall in a booming market, so it is more likely that rising capital values will gradually pressure yields down towards global levels. There is no reason why rental yields should be higher in a booming city like Dubai than in a city where the economic outlook is poorer.

3. The hype about development projects has admittedly duped even this skeptical correspondent over the years. The fact is that far less supply is coming on stream than promised by overenthusiastic developers, due partly to limited supplies of manpower and materials.

4. The prices of accommodation in Dubai are still low in absolute terms in comparison to other global cities with similar salary levels. The HSBC survey of house prices in comparison to per capita GDP put Dubai and Abu Dhabi near the bottom. This is a historic anomaly that will be eliminated by price rises.

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