x Abu Dhabi, UAEThursday 27 July 2017

Dubai's property market will not collapse: report

A tightening credit market will more likely slow than collapse Dubai's property market, according to a report.

A tightening credit market is more likely to slow, rather than collapse, Dubai's property market, according to a report by the US investment bank Citigroup. The GCC economy in the past three months had gone from a position of excessive growth and demand-driven inflation to one of tight liquidity and concern over the sustainability of growth, the report said. "Taken in isolation, a sustained liquidity crunch obviously impacts all layers of the backing for smaller developers, which had relied on off-plan sales to finance construction, had also led to significant delays in completing projects. "Small, undercapitalised developers have had to sell the majority of their units off-plan before starting construction in order to finance the project. They have had to pay for land acquisition upfront. Their lack of political backing may have contributed to significant delays they have suffered in project completion," the report said. "The result for some has been a double whammy of revenues locked in at prices well below current market levels [given near five-fold rises in prices over the last few years], construction cost overruns and greater regulation on the use of cash inflow from off-plan sales [Escrow Law]." agiuffrida@thenational.ae