Real estate agents believe that if Dubai wins the Expo 2020 bid, demand for property will increase to such an extent that house prices will go up even further.
Real estate market ‘on pause’ for outcome of Dubai’s Expo bid
DUBAI // Estate agents have reported a temporary pause in sales as people wait to see what effect the result of next month’s Expo 2020 vote will have on the property market.
It is believed that a win for Dubai will push up demand for property in the emirate, sending prices rocketing up from current highs.
Already this year the market has witnessed a massive increase in the cost of property. Between the second quarter of 2012 and the same period this year, the average property price in Dubai increased by 21.7 per cent, according to property consultancy Knight Frank.
“It’s silly season out there at the moment,” said Mario Volpi, managing director of Prestige Real Estate.
“Owners are either putting prices up or not doing anything – literally waiting until November 27.”
He said the hype surrounding the Expo bid had already been a key driver in raising property prices.
If Dubai is successful, the launch of a brace of new infrastructure projects linked to the bid will mean an influx of white collar workers that will further fuel demand for real estate.
“If Dubai wins, everything is definitely going to be on a plus,” said Mr Volpi. “But it’s not measured at all. Some people think it’s carte blanche to raise property prices through the roof. Sellers have gone mad.”
He added many developers who announced new projects at the recent Cityscape exhibition have delayed selling properties for two months. That sentiment was reflected across the market.
“Things aren’t quite as busy as they were in terms of transactional business. There appears to be this mood of waiting to see how things will be on November 27,” said Mr Volpi. “I feel like this is the calm before the storm.”
Ian Albert, regional director of property company Colliers International, said the number of mortgage valuation requests received were already higher than ever. However, if Dubai wins the bid it could become even busier.
“There’s an expectation that it will spur the market on further, but our concern is over how much more spurring the market can take,” he said.
“We’re already moving at a considerable pace. At this stage we need to consider the impact on the overall economy.”
Last month, the Dubai Land Department increased registration fees for new purchases from 2 to 4 per cent of the total value of the property. The move was expected to cool off the market and stop a property bubble from forming.
“A lot of buyers are pausing for thought,” Mr Volpi said. “If they stop buying, and stop buying in numbers, then sellers will be forced to lower their prices.”