Property News

December 4, 2014

With the recent worry over oil prices decreasing, people fear that property prices in Dubai will be affected as well. This week Dubai’s index has fallen by 3.4% as a knock on effect from the slow down in China’s economy, the European crisis still going on and the fact that the US are starting to produce more of their own oil. Therefore Arabic oil is not in as much of a demand as before. But how will this affect the property industry in the UAE?

As soon as the news broke earlier this week, Emaar Properties’ share prices instantly dropped 3.7% and Arabtec Holding fell a dramatic 5.0%. This may be an indication that developers in the country may be slightly affected by the drop in oil price, however hopefully this should that dramatic.

With the numerous plans in the pipeline to dramatically change the landscape of Dubai, such as the Dubai creek expansion, Mall of the World, Opera District and many more, the small drop in oil prices should not affect the investment in the UAE.

OPEC (Organization of the Petroleum Exporting Countries) has released a statement advising people not to panic as they believe the situation will just improve naturally by itself and believe some of the reason for the drops in other industry shares, such as the real estate market, may be because investors jump ahead and panic as soon as the market starts to slow as they fear another financial crash.

Many agree that the real estate industry in Dubai is extremely sensitive to other market increases and decreases, always fearing the worst. However, as the oil price situation solves itself and investors continue to keep faith in the UAE economy, the real estate industry should not be affected. For now, buyers, tenants and investors have to keep calm and not make any rash, panicked decisions. OPEC have advised that the oil price will bounce back by Q2 of 2015, meaning that as far as they are concerned this situation is only temporary and things will return to normal within the next 6 months, leaving property invested assured that this will not lead to another financial crash in Dubai.

The advice for property investors is to keep a close eye on the oil industry, but not to panic over it. Market ups and downs happen regularly and should not mean investors should withdraw their money from property or the real estate industry. As Dubai develops and even more communities are built, more people are brought to the city, increasing other industries in the UAE, such as tourism and retail, bringing even more income to the economy.

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