Property Market Analysis: Trends in Dubai, UAE (Economics)

This report presents a detailed analysis of the property market in Dubai, UAE, focusing on both residential and commercial sectors. It begins with an executive summary and an introduction outlining the problem statement, which highlights infrastructure issues and fluctuating property prices. The report aims to explore current trends and challenges in the Dubai property market. A literature review examines property market concepts, cycles, and associated risks, along with an overview of the Dubai economy and real estate finance. The methodology section describes the use of structured interviews with real estate agents and secondary data analysis using a thematic approach. The findings and discussion sections analyze both primary and secondary data, leading to conclusions about the market's dynamics. The report also includes tables, graphs and references to support its arguments. The study concludes with a discussion on the UAE government's property regulations and their impact on the market.

Running head: PROPERTY MARKET ANALYSIS
Property Market Analysis
(The UAE, Dubai Market)
Student’s name:
Name of the university:
Author’s note:

1PROPERTY MARKET ANALYSIS
Executive Summary
In this report, property market analysis of Dubai, the UAE has been done. The commercial
property segment and residential property both are important in real estate sector of Dubai.
Dubai market is one of the attractive property bazaars for the buyers with international
recognition. Property market analysis provides a clear snapshot of the real estate market of this
place. The property market is very viable and it provides a certain percentage of GDP of a
country. During the global recession, 2008 and 2009, the property market of Dubai faced several
issues. This report tries to complete property market analysis report by developing, analysing and
organising and presenting a coherent and well-supported argument based on argument. In the
first section of the report, problem statement of the report has been given. There is certainly
demand in the market to purchase the housing property in Dubai; however, infrastructure issue is
prevalent. The prices of residential properties are soaring high in Dubai with global recessionary
trends. The real estate companies are facing the issue of infrastructure bottleneck. In Dubai, the
real estate development has been continuing for a long time and the companies of real estate
have been facing the issue of shortage of water and electricity. Dubai city needs infrastructure
support along with clear policy. Property market in real estate needs comprehensive policy. The
aim of the study is stated as the exploration of the property market and the current trends of the
property market in Dubai, the UAE. In the literature review section, scholarly papers have been
reviewed based on the current conditions of the property market in Dubai, the UAE. The stages
of property cycle and risk factors in the property market have been discussed. Current economic
conditions of the UAE along with growth in the property market have also been delineated.
In the methodology section, primary data have been collected through structured interviews of
the three real estate agents in Dubai, the UAE. 5 open-ended questions have been prepared for
this. Secondary data has also been collected to align with primary data. Thematic analysis has
been done in order to understand the issue and growth factors of the Dubai property market. Four
themes have been segregated and the themes have been established with graphs and tables. In the
findings and discussion section, the analysis of both primary and secondary data has been
deduced. It is concluded that the UAE government permits the grant of sales of properties
through permission by MRHE. The new act of property says that purpose of selling the land or
house should be to buy another house or land; the beneficiary should provide written agreement

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to the transaction being given by MRHE. The act also shares that the buyers must be UAE
nationals.

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Table of Contents
1. Introduction..................................................................................................................................4
1.1 Background of research.........................................................................................................4
1.2 Problem statement..................................................................................................................5
1.3 Aim and objectives.................................................................................................................6
1.4 Significance of the study........................................................................................................6
1.5 Limitations.............................................................................................................................6
2. Literature review..........................................................................................................................7
2.1 The concept of property market.............................................................................................7
2.2 Concept of property cycles....................................................................................................7
2.3 Associated risks factors of property market...........................................................................8
2.4 Overview of Dubai economy and real estate finance regarding Foreign Investment............8
2.5 Current growth of residential property market in Dubai........................................................9
2.6 Identification of issues of Dubai property market...............................................................10
3. Research methodology...............................................................................................................11
3.1. Research philosophy...........................................................................................................11
3.2 Research approach...............................................................................................................11
3.3 Research design....................................................................................................................12
3.4 Data collection methods.......................................................................................................12
3.5 Sampling method.................................................................................................................12
3.6 Data analysis techniques......................................................................................................13
3.7 Ethical considerations..........................................................................................................13
4. Data collection and data analysis...............................................................................................13
4.1 Data findings........................................................................................................................13

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4.2 Thematic analysis.................................................................................................................16
5. Results and discussions..............................................................................................................22
6. Conclusions................................................................................................................................23
Reference List................................................................................................................................24
Appendix........................................................................................................................................28

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1. Introduction
Property market analysis refers to the research of the present market values of the property.
Property market of an area can be segregated into two parts, commercial property and residential
property. The performance of two property market analysis needs to be done in order to
understand the growth of the market of an area. Property market analysis includes the process of
explaining demand, supply and pattern of rising prices. The stock of the property market can be
measured through the last year prices of residential and commercial area. In this report, Dubai
property market, in the UAE has been chosen to show the property market analysis. Moreover,
there are six main sections in this report. Literature review section provides the secondary data
on property market of Dubai and in this report; both primary and secondary data have been used
for analysis.
1.1 Background of research
Dubai is one the major important cities in the UAE and Dubai the most populated cities in the
UAE. Dubai is situated near Persian Gulf. Dubai is the capital city of emirate of Dubai and
Dubai is emerging as the global city and important business hub in the Middle East. Dubai is
important for the business people and it has major transport hub for the cargo and the passengers
(Al Faris & Soto, 2016). Many foreign people live here for business and employment purposes.
43% people In Dubai are Indian and many of the foreign people find the residential properties for
living. The economy of Dubai mainly based on the trade and revenues collected from the oil
exploration (Alfaki & Ahmed, 2017). Property market had faced major downfall during the time
of 2008 due to global recession and after 2016, Dubai property market witnesses trend of
refreshing position to revive the growth of sales and investors’ planning to invest. Expatriates of
several nationalities gave capital into Dubai to make the trade and property boom started through
mega projects of The World and Palm Island (Al Iriani, Elbadawi & Fadhel, 2016).
As stated by Thaler (2018), Dubai has been observing the white-collar employment, strong
economy and wages growth in this area and the increase of price can be soaring high with 15%
in next year. Agents are making money and the buyers try to purchase the residential property
during the summer. Therefore, the Dubai is experiencing leaving of native people through selling
the properties, houses and apartments. In the recent time, this place is in high demand for

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residential property and buyers are willing to wait for the property. Dubai is known for the
skyscrapers and property market is in high demands. Maximum residential properties are high-
rise and buyers have to purchase the apartments. Apart from the residential properties, the real
estate agents and companies are focusing on the infrastructure making on healthcare as it is
going to be famous for medical tourism (Buckley & Hanieh, 2016).
1.2 Problem statement
The residential property market is strong and it is leading towards dangers of potential
oversupply. The real estate developers are launching new residential projects investing almost
billions of dollars. Fourth quarter of 2017 observed many of the completion of the villas and
townships in Dubai. The construction will also increase in next two years and the market will
approximately touch almost 360 billion AED (El Alaoui et al., 2017). The investors can expect
the abundance of supply of residential property with affordable opportunities. The residential
properties are open for sale and lower rents houses are of great demands in Dubai property
market. The common people of this place are selling property due to make a profit. Some of the
people are giving the house on a rental basis. The median sale price of these units of housing
property climbed to almost $ 500,500 and this figure shows the growth of 13% almost (Rogers,
Lee & Yan, 2016).
Dubai area has been observing capital growth of 22% and this growth will continue to rise
(Bodolica, Spraggon & Shahid, 2018). Dubai residential property market has been facing the
issue of lack of planning and infrastructure that could land the real estate developers and agents
into trouble. So many projects are running in Dubai and each and every project need water and
electricity. Dubai does not have any proper planning of the water and electricity is the basic
needs. Recent projects are targeted to middle-income group. The property prices in Dubai
fluctuate in unprecedented level following the global trend. Real estate companies and investors
have reported that the infrastructure and comprehensive city planning are missing that could
harm potential property market. Residential property sales in last year performed average in
apartment selling as sale was -0.9%, rent was -1.7% and villas -1.1% (Thenational.ae, 2018).
This report aims to highlight the infrastructure issue in Dubai along with government, investors
and owners initiative in this.

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1.3 Aim and objectives
The aim of this report is to analyse the situation of current residential property market in Dubai,
the UAE.
The objectives of the report are:
 To highlight the current situation of property market in Dubai, the UAE
 To recognise the issues of Dubai residential property market
 To analyse the recent growth of Dubai residential property market
1.4 Significance of the study
This report is significant for the buyers who want to purchase residential property in Dubai. The
people can identify the current rise or decrease of market price in property. This report will be
significant for real estate companies as they can understand the growth in the property market.
The people who want to take houses in Dubai in rental basis, they can also understand the current
market trend. Investors in real estate market can find the information of the open space of vacant
land or place so that they can develop new infrastructure. This report has significance in terms of
the new projects in Dubai from where the people can understand the growth of population and
property analysis that live close proximity to this area.
1.5 Limitations
The main limitation of the report will be secondary data as secondary data of property market
analysis, especially on Dubai is scarce. The researcher has tried to access government based
reports on property market and online reports of the real estate companies to capture the
secondary data. At last, the researcher decided to collect primary data in order to continue this
research focusing on Dubai. The researcher also faced limitation while collecting the primary
data as respondents did not have enough specific information regarding property market up-and-
down in Dubai. Another limitation of the study is the sample size of the respondents as the
researcher did not have enough access to collect the primary data to large numbers of
respondents.

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2. Literature review
In the literature review section, scholarly articles of the authors have been reviewed in order to
provide secondary data and theoretical understanding of the study. In a literature review, the
concepts of property market analysis in different aspects have been explained with reference to
the secondary sources.
2.1 The concept of property market
The property market is encapsulated by the buildings, lands and housing apartments that have
legal owners. Real estate is the post-modern term that is significantly affixed to the lands and
buildings. The lease and sale of the real estate are major economic actions and this must be
regulated by the government. There are two major types of properties, residential real estates and
commercial real estates. According to Zin, Ismail & Azmi (2018), commercial properties
associated with the lease and sale of the property in purpose of the business, whereas, the
residential property is involved with rent and sale of the houses to common individuals and
family beings for daily livings. In Dubai Emirate, the real estate agents must have the license to
do selling activities and the real estate agents take the commission for selling the properties. Real
estate companies have been doing good business in Dubai as the comprehensive reports made by
them include all the comparison of the day. Property market for both commercial and residential
must be checked with opportunity to sell, provide rent or make the new projects. According to
Stiglitz & Rosengard (2015), investment opportunity in an area can be decided by the property
analysis as visual perspective can give the additional information to show the price and value.
2.2 Concept of property cycles
As stated by Qiao (2015), property cycle is the logical sequence of recurrent actions that are
reflected the factors of fluctuating prices, rentals, vacancies as well as demands in property
market. The investors in the property market search for the right time to invest in the property to
maximise the profit when the matters come to sell. Property cycle starts with the value stage; in
this stage, the prices are flat and it may lead to many individuals to believe that it is the good
time to purchase the property. In the growth stage, the price begins to soar high and the speed
becomes slow at first and then the market can pick up the pace (Puah et al., 2016). In the peak
stage, the price gets to the top of the market and prices can increase very rapidly. In Dubai, the
property price has been increased to at least 20% and in this stage; the property price can lead to

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the highest point. In addition, the last stage is about correction stage and it is the stage about
price moderation. Investors in property market often equate correction of price; however; the
correction can be simply long and slow period towards the price stagnation. Therefore, it can be
deduced that after a period of stability of price in the property market, individuals can regain the
confidence to invest in property market (Hui & Wang, 2015). On the other side, economic cycles
of property market are fluctuations of the economic actions that historical analysis can proceed
with upwards and it can follow with pauses and relapses.
2.3 Associated risks factors of property market
Before making purchase of the property, the real estate investors need to check the up-down of
the market cycles. The market can be occupied with steady rent increase and strong occupancies.
The market can be risky if the investors cannot the trigger at the imbalance of demand and
supply (Warren, 2018). The chances of new development must be checked in order to surge the
investment opportunity. In addition, the investors in the property market, both in residential and
commercial, geographical risks should be analysed. Location of the property can play a
significant role in setting the prices as the investors need to analyse the region, state and city in
which the property is located (Jadevicius & Huston, 2017). In this regard, the investors of the
business must understand the environmental risks that are part of the real estates. In Australia or
New Zealand, bushfire, flood and being near power line can set the price of the property. As
argued by Aalbers (2016), property market is volatile; therefore, the investors take time before
investing in a property as market condition can change any time and the investors would not
have time to resale the property. Local economic impact can cause issue to property if the
property is residential as people buy residential property to live over there (Crosby &
Henneberry, 2016). If the lifestyle of the place and standard of living is high; the investors may
think twice before committing. In Dubai, the real estate companies saw boom with double-digital
growth in real estate. However, the banks of Dubai tightened the lending of money to the
construction firms for the cancelled projects
2.4 Overview of Dubai economy and real estate finance regarding Foreign Investment
Dubai can be defined as one of the fastest growing economies across the globe as the GDP of
Dubai is expected to touch US$107.1 billion and it grew at the rate of 6.1% (Alfaki & Ahmed,
2017). The backbone of the economy is the oil and natural gas industry. The GDP per capita in

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Dubai was $40,160 in the year 2017 and the inflation rate is 1.4%. Unemployment rate in Dubai
is 4% (Alfaki & Ahmed, 2017). The people have money and the disposable income in Dubai is
high, therefore, the people have high purchasing ability. Property and construction industry trade
touched at $350 billion in the year 2016 and China is the Dubai’s largest partner of trading
(Worldfinance.com, 2018). Housing property in Dubai has been receiving good attention from
the banks and media. The UAE has the issue of immigration and rapid growth of overseas
visitors lead to the boost in the rent of house in some of the sections. Short-stay visitors in Dubai
are more and temporary residents can gain the relaxation of credit guidelines and it allows them
to purchase of home with 10% deposit. Foreign investors purchase the houses and they do not
rent them. Prices of Dubai’s high end properties had increased during 2016-2017. Despite the
fact of geographical and political unrest, the real estate market is the heaven for investing the
money for foreign investors. Dubai Department of Economic Development agreed that real
estate provided almost 21% of GDP in the year 2017 (Eid Mohamed, Elkaftangui & Farouk,
2017). Dubai has been selected as the top-rated place for the real estate foreign investment within
The GCC. Dubai had the largest investors as data showed by the Dubai and Land Department
with total $13 billion (Huston, Lahbash & Parsa, 2017).
2.5 Current growth of residential property market in Dubai
Many of the visitors come to this place to enjoy the scenic beauty and for the employment as
well as business purposes. Townhouse type of dwelling is much in Dubai as the percentage
shows the figure of 56%. Median sale price of housing property in the year 2016 reached the
total transaction of 1,400 in the very first six months (Eid Mohamed, Elkaftangui & Farouk,
2017). In recent time, Dubai has been experiencing the down cycle; therefore, the investors are
leaving the market. The property market is reaching the bottom; however, it may rebound soon.
In 2018, population growth may reach high to increase the demand in the property market and it
may likely to follow the same trajectory. The demand can strengthen and it may potentially
offset the rise of the supply. In addition, in Dubai, the property investment can bring the healthy
yield for the aspiring investors. Homeowners have avoided the historic change of the tax policy
and government has introduced VAT (El Alaoui et al., 2017). There are no tax for the property
appreciation, capital gains and salaries yields in UAE for the expats.
The UAE Dubai Abu Dhabi

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Three bedroom
house unit
Two bedroom
house unit
Three bedroom
house unit
Two bedroom
house unit
Median price
change
13% 22% 16.5% 11.6%
Rental house
return
2.9% 4.1% 3.6% 4.7%
Total property
return
15.6% 26% 20.1% 16.2%
Table 1: Property Market snapshot in the UAE
(Source: Bodolica, Spraggon & Shahid, 2018)
The transaction of lower price house and apartment has been decreased by 25%; this data shows
the change in consumer behaviour of Dubai area (Buckley & Hanieh, 2016). The government-
based new projects have been continuing in Dubai area where new projects are mainly depended
on consolidation and demolition of the existing sites. The market is experiencing to have more
products offering with affordable emerging communities.
2.6 Identification of issues of Dubai property market
Dubai market has seen the property crash during 2008-09 and domestic developers have been
ploughing the developments; however, these companies are missing the additional finer strokes.
The investors have been keeping the buying-off plan and the banks have become even tighter to
provide loans and financial help. The government of UAE has been planning to come up with
implementation of tighter regulations. These issues can lead to the highs and lows of the projects.
The reduced volatility of the market can play as cushions to the venture in the real estate market
and the investors need to research the market in order to reduce the risks (Zin, Ismail & Azmi,
2018). Emaar is one of the largest real estate companies of UAE and it grabbed the profit of 8%
in the year 2016 and the second quarter of 2016 brought appetite to investor to increase the
demands in the market. The real estate companies are facing the issue of lower profit margin and
the construction companies are facing the problem of delayed payment cycle (Wüthrich,
Bühlmann & Furrer, 2016). Alder Properties has been facing the loss for consecutive 4 quarters.
The foreign owners do not live in such apartments and houses; therefore, the houses are empty.
Native owners are waiting to raise the price of such apartments and houses to sell. The investors