Official figures indicated that over 200 commercial property projects were cancelled in the Middle Eastern country of Dubai, apparently due to the global economic downturn. The last two years have seen the commercial property sector slumping as a result of the downturn, which has led to investors having to review a great number of commercial property projects.
Recent data published by the Real Estate Regulatory Authority of Dubai, pointed out that a total number of 217 projects were postponed or cancelled over the course of the last two years.
In addition to this, the extent of the slump also led to a severe drop in commercial property prices, which saw a decrease of no less than 60% in certain areas. RERA Dubai only expects around half of any proposed real estate projects to eventually be launched or continue normally.
In terms of residential property prices, it is already known that Dubai is by far the worst performing Middle Eastern country. The official statistics for May indicate a drop of 1.2 per cent on residential property prices and a 1 per cent fall on rental rates.
As a consequence, Dubai has announced the beginning of its plans to revive the market and make it more transparent and mature. In addition to this, the Land Department of Dubai is also planning to introduce more rules for surveyors of real estate.
Buyers have also been affected by the fall of the market, with many of them being taken by surprise by their grossly inflated valuations and the huge mortgages associated with them. Not to mention about the foreclosure risk, predominant for most of them.
Middle East real estate manager Samuel Morris, believes that the main reason for the present commercial property situation is the vast amounts of money which were lent by financial institutions during the boom times of the country.
