A short time ago we set up a poll which gave readers of the forum the chance to vote on who and what they believed caused the Dubai property downturn . There is an array of different elements included in the vote and the results so far (the poll is still alive and ongoing) make very interesting reading.
So far the thread has seen received 23 votes with the various categories including :-
The authorities
Domestic property investors
International property investors
Property developers
Property sales agents
Banks
The global economic crisis
Mixture of the above
Not sure
The results so far are as follows:-
Mixture of the above
By far and away the most popular vote so far is for a mixture of the various elements listed above with 34.78% of the opinion that not one single element is fully responsible for the situation in the Dubai property market at the moment.
The global economic crisis
With 21.74% of the vote the global economic crisis is a favourite amongst people who have an opinion about the Dubai property market. While there’s no doubt that the global economic crisis may well have been the catalyst for the problems we are seeing today, have other elements affected the speed of the downturn?
The authorities
A number of forum contributors have over the last few months suggested that the authorities in Dubai were too keen to push the property market to international and domestic investors and did not see the economic downturn coming (17.39% of the vote). There is also concern that the authorities do not have the experience to deal with such economic climates, which has impacted upon the market and made the situation worse.
Property developers
This is all so a common issue amongst property investors in Dubai with many believing (13.04% of the vote) that property developers have a significant part to play in the rise and fall of the Dubai property market. There is also criticism of the fact that many property developers have “disappeared” overnight when the situation reached crisis point.
Domestic property investors
There is a very small minority of those who have read the thread who believe that domestic property investors had a significant part to play in the Dubai property downturn. This particular element polled only 4.35% of the vote although some believe local demand has had a significant impact upon property prices in the area.
Banks
Polling the same amount of votes as domestic property investors (4.35%), the banks have come in for a fair amount of criticism over the last few weeks. Many have highlighted the fact that credit lines have been severely reduced and many property investors are unable to arrange significant funding for purchases in the Dubai property market. There is also a suggestion in many threads that credit was too easy to obtain at the height of the market.
Not sure
Those not sure of the specific reasons for the rise and fall of the Dubai property market also totalled 4.35% of the vote. In some ways it is difficult to put a finger on exactly who was to blame and who played a major part in creating or worsening the climate which property investors in Dubai are experiencing today.
International property investors
Interestingly there have been no votes with regards to potentially blaming International property investors even know they have had a major say in the property market over the last few years. Many people within Dubai blame International property investors for pushing prices too high and continuing to buy into a market which was “obviously” overextended. There was also a period after the credit crunch started to affect the worldwide economy that many international investors saw Dubai as a “safe haven“, which some people believe contributed substantially to the eventual collapse in the market.
Property sales agents
Again, property sales agents attracted 0% of the vote which is rather surprising when you consider that many investors have suggested that property sales agents have been pushing properties which were “obviously” overvalued. There have also been suggestions that property sales agents looking to sell properties in Dubai have been “more upbeat” than the situation merited.
General consensus
While a number of voters have targeted specific elements as to the reason why the Dubai property market rose so quickly and then fell so dramatically, the vast majority believe that a number of elements have come into play at the wrong time. In many ways the results of this poll show that while there have obviously been mistakes from certain parties, overall the sector has basically succumbed to the worldwide economic slowdown.
The future of the Dubai property downturn
There are serious concerns that the substantial rise and fall of the Dubai property market could have severe consequences for some time to come. A number of elements have been exposed which includes the banking system in the region and the authorities, who many believe are too inexperienced to handle the current situation. However, in all honesty the current economic climate around the world has caught many governments and authorities off-guard and nobody quite knows what to do and when to do it.
One of the more positive aspects of Dubai is the fact that the tourist industry has grown significantly and many businesses have moved into the region. This should, in due course, give something of a backbone to any potential recovery and even though it may take international investors some time to return to the market there is definite potential for the future.
Conclusion
When you read the Dubai Forum a number of posters have suggested certain elements of the Dubai property market and the Dubai authorities are more to blame than the economic situation. However, voters in this poll seem to be a little more even-handed with many believing the global economic crisis and a mixture of various elements have contributed to the collapse of the Dubai property market.
There is no doubt that the Dubai property downturn had become something of a “hot spot” and much of the “speculative” money has now been taken away. However, those who suggest the market is dead and never to return may well be a little premature with their predictions.