Consumers await ‘sanity’ in Dubai’s property market
DSL Exhibitions, organizers of the upcoming Resale and Rental Property Show (The R&R Show) – to be held on the 8th and 9th of September 2006 at Dubai’s Crowne Plaza Hotel – recently commissioned a consumer survey that interviewed 412 individuals living in Dubai on the various aspects of Dubai’s property market. “The business survey we recently conducted with executives working in Dubai’s real estate sector received excellent response, both from the industry as well as the media,” said Tessa Morris, Marketing Director at DSL Exhibitions. “This is the second survey we conducted with consumers and lay people in Dubai to understand opinions from the other side of the fence, so we can present a full picture on what people feel about Dubai’s property market,” she added.
The survey, conducted by a research division of Communicraft, generated results from 412 individual respondents who have lived in Dubai for at least 3 years. The demographic backgrounds of the respondents were chosen to reflect the population mix of Dubai to avoid bias that a particular segment may hold on the issues presented. The proportions were as follows: UAE nationals 20%, Indian sub-continent 60%, Arab Expatriates 15% and others 5%.
• Rents a mismatch for incomes: On being asked whether rents in Dubai reflect residents’ income, when compared with other countries, a whopping 92% said that rents take up a larger proportion of Dubai residents’ income than elsewhere. When asked to justify their answers, respondents cited countries as diverse as the UK, Australia and US as examples, where on an average, rents form a smaller proportion of residents’ annual take-home. Reflecting this anomaly, 72% people said that they spent half or more of their annual income on home rentals, while 67% said that this made living in Dubai ‘unviable’ in the medium to long term.
• Rentals unsustainable at present levels: While only 45% of the respondents felt that the sale prices of properties were too high in Dubai, nearly 87% said that rentals are unsustainable at current levels. But only 32% of the respondents said they were ‘sure’ rentals would come down in the next 3 years, while a majority (47%) said they were ‘cautiously optimistic’ of rents subsiding to lower levels.
• Secondary property market to impact prices: As more individual sellers of property enter the market, developers’ prices will be affected, the survey found. 43% were confident of this phenomenon affecting Dubai’s property prices while 31% felt there would be ‘some impact.’
• Mortgage market ‘under-developed’: 62% of the respondents said that the mortgage market in Dubai is still ‘nascent’ as schemes such as rent-to-buy are either non-existent or very rare, while 21% felt that products were growing to meet the needs of property buyers. However 82% of the respondents said that mortgage was ‘too expensive’ when compared with developed markets. Citing an example, one respondent said that in the UK, average mortgage repayment as a percentage of average household income has remained between 15% and 20% for the last 20 years*, never exceeding 25%. “If the same conditions are replicated in Dubai, most people will prefer it to buy properties on mortgage than rent homes,” he said.