The Plunge in oil prices will not have a significant impact on the Dubai’s thriving property market due to high demand for property. In 2008 due to recession when the oil prices slumped, it had substantial negative impact on the real estate market, the prices residential prices almost halved it prices. So since the last slump the oil prices and their rise and fall in prices are been strictly evaluated. The United Arab Emirates has developed and amount to have great fiscal reserves which are anticipated to allow government keep spending profoundly, protecting the economy from the reduction in oil revenues.
The Real estate market in Dubai has recovered completely and is exposed to no danger of crashing than it happened in 2008. As stated by Harshjit Oza – The assistant director of research at Naeem brokerage in Cairo: The lower prices of oil will have effect Dubai’s property market in the long run due to the demand from the China, India and Europe for properties. Dubai is less exposed to the impact because UAE as a whole is not dependent on oil compared to other huge Gulf economies, Dubai with little oil and great tourism, trading sector and travel will be less affected to the slump.
According to Harald Finger, the International Monetary Fund’s head of mission for the UAE said In the UAE: Kuwait, Saudi Arabia and Qatar have accommodated time to building fiscal reserves that will allow them to continue spending even if the Brent Oil is at $115 a barrel as lately as June, stays also to $60 or will go even lower. There is ultimately no requirement of less spending, and it will not be essentially desirable.
Very comparable statements have been made by the Saudi finance minister and other Gulf economic officials. The effect of slump in the oil price is going to be psychological more than economic. The mortgage borrowers now will receive increased amount of deposits and this will limit short term speculation in property and Dubai has already doubled its land transaction cost. Although if demand from the Gulf does lessen, it will not have an impact due to the interest in Dubai property is broadened.