Sky rocketing rental prices in Dubai are expected to last another two years before the housing market begins to subside, according to investment bank EFG-Hermes. “Supply in the residential property market is and will continue to be constrained in 2007,” according to a statement by Sana Kapadia, Research Analyst at EFG-Hermes. Helped along by a continuing influx of foreign workers, the population of Dubai is expected to rise to almost 1.9 million by 2010, up from 1.4 million currently.
Overall, the cost of accommodation in Dubai is expected to soar between 10 and 15% during 2007, and by up to 10% in 2008, before prices start to decline in 2009. EFG-Hermes said Dubai’s real estate market has witnessed a far slower than expected pace of completed projects in 2007 with only c.11,000 units of the expected 57,000 coming on line. Supply continues to lag behind demand, and the delay in available properties is being compounded by population growth in Dubai.
Authorities in Dubai are also pushing hard to bring down the costs of accommodation as the rise in the UAE's inflation rate last year to 9.3% was impacted severely by the rising cost of accommodation. The plummeting value of the US dollar has also added to inflationary pressures as the UAE and four other of the six GCC member states have their currencies pegged. The drop in the US dollar has drastically pushed up the cost of imports from places like Europe. The six GCC members - The UAE, Saudi Arabia, Bahrain, Kuwait, Qatar and Oman - all peg their currencies to the US dollar.
ArabianBusiness.com
