Oil prices trading dubai real estate
However public sector continues to be the second largest employer in Dubai with roughly Reduction in public spending might push many of these employees to cut their spending and a recent report in the Wall Street Journal hinted at even job cuts in the public sector.
Another reason is the tourism and hospitality sector in Dubai. According to a report by MasterCard Dubai airports capacity and frequency of flight destination is the third best in the world only behind London and Paris. Master Card Dubai tops the list with the most number of overnight international visitors: According to a report on ArabianBusiness. Although low oil prices do not seem to have much impact on the overall diversified and non-oil reliant economy of UAE, it will certainly have an impact on real estate prices.
There are two main reasons for this 1 Buyers 2 Liquidity. Most of these countries have oil based economies where purchasing power is determined by the economic growth fuelled by rising oil prices, it is safe to assume in the event of budget cuts and fiscal deficits, GCC, Russian and UAE investors would feel holding cash more important especially in the economic instability.
Political and economic uncertainty may also have reduced their numbers. Second aspect which may have contributed to price decrease is the liquidity of the local banks.
Government and its institutions contribute large deposits to banks, in the event of low oil prices and rising budget deficits government may be forced to withdraw from these deposits which impact availability of credit and therefore fewer buyers of real estate. Rental market is steady and is expected to remain that way for the foreseeable future, tourism and the labour market by all accounts are growing and this will keep rents relatively stable. From buyers perspective this is a good time to buy real estate in Dubai, because of lower price and steady yield, oil price once it starts to re-bound will only have a positive impact on the real estate price.
Overall we can conclude that low oil prices have not really hurt real estate market in Dubai because its price is influenced by many other factors, we can say that it is fairly steady with a slight price decrease. Registration successful Thank you for registering. Please make sure you check your spam folder if the link is not delivered to your inbox. VAT is a measure that will allow more stability, given that the outlook for crude prices remains volatile.
Although oil plays a major role in the availability of credit from banks and many buyers in Dubai real estate are from countries solely dependent on oil, the impact is not that significant. From a buyers perspective, this is a good time to buy real estate in Dubai, because of lower prices and steady yield, and once the oil price starts to rebound this will only further a positive impact on the real estate price.
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