Can rising oil prices keep Dubai’s fast growing real estate market from imploding? Right now, rising oil prices are the major cause of Dubai’s 15% yearly inflation. Yet, according to The Guardian, approximately 1/5th of the world’s construction cranes are at work in Dubai. It is the fastest growing city on the planet and has “about $100 billion worth of projects underway or planned for the new future.”
According to NuWire Investor, Dubai’s real estate market has only been open to foreigners since 2002. Since then prices have jumped over 200% for many single family residences. How much of this appreciation is a result of a rapidly growing city with an artificially depressed market closed to foreign ownership versus irrational exuberance in the Middle East’s most business friendly climate?
Only time will tell, but investors would do well to take heed. Real estate markets tend to go through booms and busts as a result of new construction. Because of the time involved in planning and approving large developments, developers tend to overbuild when things have been going well and underbuild when things have been going poorly.
Never before has the world seen such an incredible pace of construction in one city. It may be a telling sign.
has the time com?