Dubai At The Risk Of Facing Economical Crisis From Property Oversupplying
United Arab Emirates ‘ largest and most populous city (UAE), Dubai, is currently at the risk of facing ‘economical crisis’ due to property oversupplying. According to one of its biggest developers, DUBAI needs to stop all new home construction for one or two years to prevent an economic disaster caused by continuing over-supply. A slowdown in Dubai’s economy and a slump in real estate prices can be seen recently.
“We’re entering a crossroads now,” Damac Properties PJSC Chairman Hussain Sajwani said in a Bloomberg interview. “Either we fix this problem and we can grow from here or we are going to see a disaster.”
Sajwani warned that ignoring the over-supply could cause problems for the banks of the city. Home pricing declining would inevitably lead to increasing of poor loans and higher provisions against default which in return hitting the profitability.
Recently, Dubai has set up a commission to limit supply and ensure that private property developers operate in a healthy and fair environment.
According to property broker JLL, there is about 30,000 new homes will be built this year in Dubai which is double the volume of demand in the city. In the last two years, Damac has dramatically reduced new sales and will focus on selling the properties in its inventory, said Sajwani. Sajwani pointed out that the primary problem of oversupply was his competitor, the E-maar Properties PJSC, who offered payment plans to stimulate speculation.
Do you think it’s the right time for a wonderful city like Dubai to halt their on going skyscraper projects now? Drop your comment below!