Real Estate Bubble in Dubai

By- Anuj Taneja

Table of contents
Dubai a city arisen from Desert

Transformation from village to metropolis

Measures of Diversification

The Real Estate bubble in 2008

Real Estate bubble and crisis

The reasons or the bubble
Consequences of bursting bubble
SWOT Analysis

The current situation in Dubai relating to a new bubble

Prices
Projects
Expo 2020

Conclusion

Dubai a city arisen from Desert

The transformation
Village======>Metropolis
Sand Desert Rub Al Chali covers two thirds of UAE
Access to ocean of large importance regarding Dubais

development
7 Emirates differ in economic and political significance

Access to ocean and geographical position of large

importance

Development to platform trade

Social liberal and economic policies

Attraction to many foreigners, international investors,

ambition workers.

Discovery of huge sources of Oil 1970s

Oil boom enabling exports and expansion of UAE

Dubai labelled as profit city
Worldwide awareness and connections
Oil as the source of prosperity

Measures of Diversification
Diversification generating independence from oil

sector
Expansion export-import industries, enlarging
infrastructure and financial structure
Real estate business already key function during
oil boom
Government investing in real estate to attract
tourists

Symbiosis real estate tourism to leverage one another

Creation of image of fascination

Measures of Diversification
Competition in real estate sector improving itself by

higher , quicker, and more luxurious superlatives

Highest multi-storey building Burj Khalifa, the largest
shopping mall Dubai mall etc. bear risks of
sustainability
Quality, efficiency and demand not considered by
developers
Making Several Palm Islands, Citys with in Dubai

Real Estate bubble in 2008

Assets bought to derive income out of expected return.
Property prices boosted by increasing demand of

investors
Speculators/Investors expect different growth in
ernings out of estate
Overpopulation property prices
Investors decrease demand extract capital
Oversupply properties by lack of demand

Reason for the bubble in Dubai

Opening Dubais rel estate market to foreign

ownership in 2003

Structural change
Strong shift in demand due to international investors

Competition of real estate companies to bring up

faster, better, and more construction projects

Accommodation from government related property
companies.
Equally rapid shift in supply

Consequences of bursting bubble

Extremely sharp drop in prices and transaction

volume
Drop in prices of luxury real estate by almost 20%
Prices decline for residential and commercial
properties for almost 30%

Weakness

Inorganic growth
Low growth in local
population
Islamic banking
Dependence on FDI
Government dependence on
loans
Conservatism from religion
point of view

Strength

Access to funds
Presence of big developers
Supportive government
Logistics and infrastructure
Technology and innovation
Quality standard of living
Transparency in trade

SWOT

 Land availability
Government promotions and
marketing
Attracting more expats by
industry
Conducive government laws
and regulations
Pegged currency

Adverse weather Competition

from other attractive
destinations
Bubble or expectation
Tarnishing image of Islamic
countries due to terrorism

Opportunities

Threat

SWOT

Current Situation
Increase in transactions

2012: 50%
2013: 60%
Building again : Dubai Downtown, residential and office buildings
Demand has changed
Economy grew by 4.5%in 2013
Again seen as an oasis of stability
Office rents have grown
There is new trend of giving re-renting properties which causes price
to rocket

Projects
Dubai wants to bring the focus back on their real

estate market
7 major postponed projects are taken up back again

Palm Deira
Replica of the Champs Elsyee
Taj Arabia ($273,000,000)
Alladin city

EXPO 2020
Will run from 20th Oct 2020 until the 10th April 2021
25,000,000 visitors and 250 exhibitors are expected
Invest about 6.5billion Us-dollars into the expo area
43 hectare site is divided into two parts
Planning a new city around exhibition site
All major site constructions are expected to be completed

by 2019
Advantages

Dubai stock exchange went up by 20%

Expects an income of $23,000,000,000
Investment brings new jobs

Conclusion
Demographic

Instil Islamic values in the expat population rather than protect the identity
Freehold laws should be extended to specific locations to give a feeling of
ownership to foreigners increasing demand

Strategic
Adaptation
Fulfilling local tastes and preferences like retail and hospitality
Fulfilling religious needs like temples and churches
Green city initiatives for expats
Aggregation

Forming residential regions like international city

Forming commercial regions like internet city, Tecom.
Cultural arbitrage: Promoting multi culture city.

Journey so far

Thats it!!