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In the last one year, Dubai has lost much of its lustre. The global credit crunch already hit inflows into the emirate, leading to job losses and delayed real estate projects.
According to an October report by property consultant Jones Lang Lasalle, sale prices in residential real estate had dipped by 40-60 per cent and rents by 30-50 per cent in areas they monitored.
Sales decreased significantly due to not only the outflow of expatriates, but also because of low investor sentiment and lack of liquidity, which reduced transactional volumes by 55 per cent since Q2 of 2008. Given that property prices tapered off significantly in the emirate, property investors wondered if it made sense to buy there. It was significant because Indians had been among the largest property purchasers in the emirate.
According to reports, Dubai Land Department statistics showed that majority of the villas in Dubai were occupied by Indian nationals, while the British formed majority of the apartment owners.
Out of the total 13,774 apartments registered with the Land Department between 1963 and 2008, the British owned 2,755 units, which constituted 20 per cent of the units. This was followed by Indians and Pakistanis sharing the second position with 14 per cent ownership. Iranians came third at 11 per cent. Indians topped the list of villa buyers, with 21 per cent ownership in the same period, which constituted 932 villas out of 4,436 registered by DLD.
Experts feel that though prices have slipped significantly, there could be more opportunities to buy in the future. "Dubai is hugely overbuilt. For bargain hunters, there will be enough opportunities in the next couple of years," said Akshaya Kumar, CEO, Parklane Advisors, a property consultancy.
Another reason why this investment could be deferred is because there is no secondary property market. Oversupply is also a big issue. Though property prices have been falling, construction still continues in many pockets.
According to sources, 18,000 properties are going to hit the market in the next few months. Reason: In some areas, while there has been a drop in construction by almost 85 per cent since 2008, in areas like Dubai Marina, there is still demand.
Most experts said that one should adopt a wait-and-watch policy. Though Dubai has great infrastructure, the decision to purchase should be delayed by another four-five weeks.