Thousands of foreign home-buyers and investors are currently purchasing property in Dubai. Dubai has become a focal point of a property revolution. A study is needed to understand this phenomenon and determine whether investment in the Dubai property market would be lucrative short- and long-term.
The Real Estate department of Dubai reports that there have been hundreds of residential, commercial and educational constructions in Dubai to cope with ongoing growth. The government of Dubai developed six major industrial areas: Al Qusais, Al Ramol, Ras Al Khor, Al Khabessi, Al Goze and Jebel Ali. These areas currently possess infrastructures such as roads, electricity, and communication (Real Estate Department, Government of Dubai, 2005). While growth is currently taking place in Dubai, there is much speculation as to the continuation of this growth. Reports indicate that there may be problems with supply and demand, however the good life remains inexpensive in Dubai and there is a flight to this quality. Some are stating that prices for Dubai properties are rising and buyers must make haste, while others are reporting that the demand curve for Dubai real estate has shifted since Dubai is building too much. The demand for Dubai property is determined by factors such as consumer confidence, costs of rentals, population growth, salary increases, foreign buyer confidence, the value of the U.S. dollar, and global real estate market (AME, 2005). These and other factors must be considered when determining whether to invest in Dubai real estate.
There are many theories used to help determine whether real estate investment should be considered in a specific location. For example, the Q Theory of housing investment provides an empirical model that asserts that current and lagged values of the Q ratio are positively associated with housing investment. For this model, building permits, housing starts, and housing investment expend...