Dubai’s real estate market has climbed almost back to its pre-crash heyday, but the process has been dogged with setbacks including a financing crisis and a profusion of unclear real estate agreements between tenants, landlords and developers.
To combat this, the Land Department Director General of Dubai, Sultan Butti bin Mejren, announced on Wednesday, March 26 that standardized contracts would become mandatory in Dubai from May 1. Currently standardized contracts are available but their uptake has been hampered by the fact that they are voluntary. Now, though, they’re to become compulsory.
‘The new agreements will help us to get rid of some of the problems that may occur because of a lack of clarity,’ Sultan bin Mejren explained.
There’s also a consideration of international trade. Although the majority of buyers in Dubai are currently from the gulf states, the city aspires to lead the region in both sales and excellence and Sultan bin Mejren believes that ‘having unified contracts between the parties not only avoids the misunderstanding and misinterpretation of articles that could previously have occurred, it also guarantees the rights of all the stakeholders involved.’ A market where every participant knows the deal right from the start is likely to be one that’s more attractive to foreign investors and buyers.
The Dubai property market is climbing in more ways than one, too. In a city with thousands of units’ worth of new builds, competition to offer something special to landlords or tenants is fierce and developers have found a way: views.
Dubai is a visually arresting city, with views across the Gulf and the city’s increasingly illuminated and skyscraper-rich skyline. Canny developers are taking advantage of this by offering apartments with views across the city’s best vistas – for a price.
The difference in price between an apartment with a nondescript view and one with views across the Gulf, the Dubai skyline – especially the more famous or picturesque parts – or the Burj Khalifa or the Dubai Fountain, is sometimes as much as 45%. In a city where prices are expected to rise by 10% to 15% in the coming year and rents to rise by as much as 20%, that premium amounts to a lot of money and indicates a rising luxury real estate markets that’s floating boats across the world.
It’s thought to be partly as a result of this realization that several tall buildings are being built in Dubai right now: the 335m Damac Residences, the Dream Dubai Marina at 432m, The Address The Boulevard, 370m, or the Al Attar Tower at 342m are all aimed at what’s been dubbed ‘vista value.’
As Dubai’s market climbs, both literally and figuratively, it draws in luxury buyers from across the Gulf. But we’ve seen a burgeoning Dubai market before: could we be headed for a bubble?
Marc Faber, known as a prophet of doom seeing bubbles in both the Chinese and American markets, doesn’t think so. ‘I don’t think we’re yet in a bubble stage but we had a big rise in property prices already,’ he told local newspaper The National on March 26. However, he cautioned that ‘it could become a bubble in the future.’