The problem that CEOs Face in the Dubai Realty Sector
A major problem facing CEOs in the real estate sector in Dubai is the uncertainty in the property business. CEOs in the real estate business are worried about the demand as well as the future of profitability in the housing sector. As the government continues to offer support to the privately owned properties, private companies are given land at subsidized rates. Therefore, the unstable behaviors of tenants as well as the businesses of renting have become a challenge to the CEOs. CEOs are faced with the challenge of adopting new pre-selling measures when selling these properties. The ever-changing consumer demands are forcing CEOs in the real estate business to adopt approaches that will meet the dominant consumer expectations.
Factors that Affect Demand and Supply in the Real Estate Sector in the UAE
As stated in the case study, there is a broad range of factors that affect the demand and supply of real estate in Dubai. In line with the critical issues raised in the case study, the two primary factors that affect the supply and demand of properties in the UAE are population and buyer’s future expectations. Although the population statistics are in most cases overlooked, they are of great significance to the real estate markets.
Demographic shifts in the UAE have a significant impact on the housing supply and demand trends. Population determines the demand and supply in the housing market. An increase in population will mean that the demand for houses in the UAE will rise. Secondly, the buyer’s future expectation significantly determines supply and demand in the real estate sector in the UAE. These expectations include aspects such as laws and regulations, economic policies, and inflation among others. If the buyers are optimistic about the futures markets, the demand for housing will decrease.
An Evaluation of Demand and Supply and the Movement of Price
Both supply and demand for housing affect the prices. To begin with, when the supply of houses is high, the prices of these homes will fall. Conversely, when the supply of homes is small, their prices will increase. Increased demand leads to increased costs while a decrease in demand results in reduced prices. Since most people in the UAE do not have a high purchasing power, they highly depend on credit facilities from financial institutions. Mortgage rates in UAE are directly linked to the US’ interest rates. Therefore, the most effective way of promoting the real estate business in the UAE is through enhancing financial facilities. Improvement of these commercial facilities will help in meeting the availability as well as the costs of properties.
Action that CEOs Investing in the Real Estate Should Take
Concerning the prevailing challenges, there is a need for CEOs to take affirmative action before investing in the real estate business in Dubai. When it comes to investing in the real estate sector, investors should choose areas with low-interest rates. As the UAE’s population continues to increase, prices of properties in these areas are set to rise. As a result, investors in the real estate sector will gain higher profits from the growing demand. While these investors secure their businesses, they should also put buyers’ expectations into consideration. They should be able to communicate with the customers in the case of uncertainty in the real estate market. Through the adoption of similar approaches, investors will be able to secure the future of the housing estates.