Don’t Buy Property in Dubai: Here’s Why – InvestAsian

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The sidewalks aren’t just empty because it’s hot outside. Despite Downtown Dubai’s famous skyline and rapid economic development since the 1990s, the city’s population isn’t very large at all.

We mentioned above that construction is a top contributor to Dubai’s GDP. Policymakers and local and foreign businesses, therefore, don’t have the luxury of shutting down future projects until real estate demand finally picks up.


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Such cooling measures would sink corporate revenue all across the UAE and force countless employees out of jobs.

Market interventionist tactics worked in countries like Singapore and Malaysia since they have other industries besides oil and property. On the other hand, Dubai only has two bad options to choose from.

Either the building boom must go on, in turn making oversupply issues in Dubai’s real estate market even worse, or a general economic crash must happen.

Persian Gulf’s Rising Political Tensions

It’s not saying much, but the Persian Gulf is one of the most stable and successful parts of the Middle East.

Property values in the region, from Dubai to Qatar, have consequently boomed following the Gulf’s apparently newfound stability.

Don’t take it for granted, though. Historically, the situation hasn’t always been calm in the Gulf. Tensions are heating up lately as well.

Geopolitical theater is at play in the region as Saudi Arabia and the UAE fight with Iran and Qatar for influence.

Various militant organizations remain an additional wildcard. Throw Israel into the mix, and it’s safe to assume that the situation won’t get any calmer.

Rising diplomatic tensions are arriving at a bad time, too. Oil prices are still struggling below $100 per barrel, down from their decade highs of $140.

Selling oil (and property!) is how most Gulf economies make their money. Therefore, falling energy prices affect everything from the value of real estate in Dubai to consumer spending.

It wouldn’t take a full-blown war to heavily impact the Gulf region’s economy either. Heated words, minor skirmishes, sanctions, and terrorist attacks have all been sufficient to cause destabilization in the past.

You Shouldn’t Buy Real Estate in Dubai

Hopefully, you understand why we don’t suggest investing or buying property in Dubai at all.

Too many factors could go wrong with making a property investment here – many of which have already gone wrong during past recessions.

Geopolitical problems, low occupancy rates, weak corporate profits, falling rental yields, and declining oil prices could each set off a bigger crisis with no warning.

You may think the fears we’ve expressed here are overblown. Of course, we’re just pointing out historical weaknesses along with the fact that few things have changed since the 2008 crisis.

The fact still remains: nearby real estate markets in other countries boast greater potential than Dubai’s. And if your primary goal is attractive returns, why not invest in those places instead?

Some countries in Asia have skipped recessions for more than two decades. Likewise, capital appreciation prospects and rental yields are significantly higher elsewhere in the Middle East and Gulf region.

If you enjoy Dubai and want to own a second home here, that’s always a good reason to buy offshore property. We aren’t telling you where to live if you’re simply making a lifestyle purchase.

Property prices in Dubai could even possibly rise in 2024 and beyond. We’re not saying you can’t make money through becoming a real estate investor here. That’s especially true if you’re making a long-term investment.

Specific real estate sectors like the hotel business and tourism industry in Dubai also show greater promise than others.

Nonetheless, residential and commercial properties in the Middle East’s supposed “top business hub” aren’t included among the region’s best investment opportunities.

You shouldn’t buy property in Dubai if your main goal is profit. Don’t be fooled by seemingly attractive rental yields, as occupancy rates are low in practice.

Meanwhile, numerous geopolitical and economic risks will continue harming the Dubai real estate market’s long-term appreciation prospects.

This post was originally published on 3rd party site mentioned on the title of this site

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