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| Dubai Real Estate continues to show upward trend in 2008 |
According to Egyptian investment bank EFG-Hermes, the already high prices of the real estate in Dubai will increase even further in 2008 due to the increase in price of construction materials and labor wages. The developers pass on costs to buyers because of strong demand for property and shortage of housing supply shortage. Of 57,000 residential units expected in Dubai in 2007 less than 20% have been delivered by September.
Sana Kapadia, EFG-Hermes analyst, said, "Taking both cost and demand pressures together, we now believe that both off-plan and secondary market prices will rise significantly higher in 2008 than our previous expectation of 5-10%".
EFG-Hermes also said that the drop in interest rates was adding to real estate demand in Dubai. UAE interbank rates have fallen from 4.9% in November 2007 to 2.8% in 2008 causing mortgage rates to decline from 7.9% to 5.8%.
