Dubai Property Blog

This is a question that tenants and potential home buyers are asking all the time. But with talk about the rent cap not being renewed for 2008 and an explosion of investment banking growth in Dubai, combined with inflationary local salary rises, it is a matter of how much, and not whether rents and prices rise.

There is a growing national consensus that the UAE dirham is 20-30 per cent undervalued against the US dollar, and that the time for a revaluation is approaching, even if the dollar-peg itself stays in place for GCC currencies as Saudi Arabia wants. But what impact would say a 10-15 per cent revaluation have on Dubai property?

The global economic outlook for 2008 is darkening with the ongoing US sub-prime lending crisis and the credit crunch. For Dubai real estate the balance is between lower interest rates increasing the affordability of local property versus a business slowdown and an increasing supply of real estate.

Fears that an imminent oversupply of real estate in Dubai would depress the sector in 2008 have now been pushed back by most observers to 2010, due to construction capacity constraints and the continued tide of new immigration. Indeed, the main concern is that local inflationary pressures are going to drive rents and prices higher.