Over the last 12 months, there has been a severe drop in the value of property in Abu Dhabi, Sharjah, and Dubai as the oil prices dropped down by 50% in the market. These falling rates of the oil prices are starting to affect the real estate market of the UAE as well, as according to the last report made by Cluttons, property values are now seen to be falling alongside the price of oil. The report also said that the strikingly obvious correlation between the state expenses and the hydrocarbon revenues is sure to put the collection of new jobs under a little pressure, which in turn means that office spaces will be heavily affected along with the spaces that hold houses and other residential areas.
Oil prices are at a price of $50 for each barrel, after a drop of over 50% from the June of 2014. This is having a huge impact on the economy of UAE because the hydrocarbon sector has a huge role to pay in running the country’s economy smoothly. What’s more bad news here is that the oil prices will be lower once Iran joins in on the oil exporting business.
Steve Morgan, the Chief Executive of CME, has said that a number of emerging economic factors will also play a role on impacting the number of transactions made in the near future. The government has taken up necessary fiscal measures to upgrade its financial situation since the beginning of the decline in the oil prices. They are trying to make new moves for a better future, which involves the much hyped about introduction of corporal and product cost taxes as well as the deregulation of the prices of fuel. Morgan commented on these government approaches to the problem saying that most of these moves have a higher chance of increasing the inflation on consumer prices, causing an overall turbulence among the tenants and potential estate-buyers, as no one will be willing to pay the increased amount of money to purchase houses. Some of the rises, however, might be cancelled out by the fall in fuel prices, and thus, help the UAE to maintain its competitiveness by keeping it unchallenged in the area.
While the start of the oil business in Iran may cause the oil prices to increase, it is also, on the other hand, supposed to make the property of Dubai more fascinating to the people of Iran, and thus, improve the real estate business of UAE. The year 2010 had the Iranians buying off 12% of the real estate transactions of Dubai and helping Dubai to be on the 4th place, just behind the UK, India, and Pakistan.
However, data from the DLD (Dubai Land Dept.) has recorded a fall of 3% in the investments of the Iranians during the Q1 in 2015, but Morgan believes that the Iranian nationals will take advantage of the dropping land prices in UAE, and do more business with Dubai to help and push the UAE back on top of the Buyer Nationality League Table.