Dubai Looks at an Uncertain Future- By: Mark Castellino
One thing that is clear is that Dubai is certainly at the crossroads between success and failure. Its development model, in the opinion of many, has been questionable with too much efforts concentrated on just three elements- housing, tourism and convention centers. The second part of the problem regards the excessive development that has been done in each, especially hotels and housing. Owners will undoubtedly have their hands full just making sure to get full occupancy in each of these hotels. The sheer number of developments means that competition will ensue, and while the customer will gain, investors will have to wait a long time to recover their investment.
Dubai has gone through many crises in the last year. The real estate slowdown was followed by the loss of jobs, salary cuts and freezes on bonuses, increments and hiring. After the migrant workers and expatriates had left, it affected the whole economy right down to hotels, rentals and shopping. The Dubai World debt crisis further deepened the malaise. This has been followed by a credit crunch by the banks and free fall in the stock exchange. Now efforts are being made to revive the economy, with a loosening of credit control, landlords reducing rents and hotels reducing the room charges to ensure some level of occupancy. In the recently concluded Dubai Festival it was noted that stores were offering deeper discounts and more prize winning draws just to get a good level of business.
Excessive levels of development mean that there is no shortage of decent hotel accommodation, from furnished to unfurnished apartments for rent in Dubai, holiday villas for rent in Dubai for the short or long term. The hope is that with the opening of credit facilities, the construction and real estate sector will be revived. Already this sector has shown some movement, as some firms have merged and others have resumed operations with new work teams and management.
There is also news that two UAE-based developers, namely Bonyan International and Cayan Development have started repossessing units from defaulting customers after having given them grace periods of between six months to one year. The delinquent customers had shown no signs of paying up. Meanwhile the recession was also affecting the continuity of the projects. The repossessing companies had gone through the entire process as stipulated by RERA (Real Estate Regulatory Agency) in order to repossess the delinquent units.
Such corrections are bound to bring a level of respectability for the law, as well as root out the unscrupulous investors. In the long run it will be good for the reputation of the emirate. Villas for rent in Dubai and apartments for rent in Dubai continue to be offered at varying rates depending on the location and the types of amenities available.
While the real estate market has shown signs of stabilizing, with selling rates remaining stable for the first quarter 2010, the excess of 25,000 to 30,000 units in the residential sector will definitely bring the market down- or keep it from rising beyond a certain level. Office rents too will have to reduce to entice businesses to come and operate in Dubai. At one point there were 300 new businesses opening up every week, but this is no more the case now. Clearly there is much work to be done before Dubai can revive itself.
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Mark Castellino is a seasoned traveler, educator and freelance writer. Fluent in many languages, he spends his time in Dubai working at Dubai Media City. Mark often comments about life in Dubai especially with regard to Dubai property and Dubai real estate. He has vast experience of working in the Dubai Property market.