Healthy Dubai real estate market can ride out cheap oilPosted on: 30th December 2014
The plunge in oil prices may take more of the froth off Dubai's booming real estate market, but broad-based demand for property is likely to prevent any crash.
As the global financial crisis slashed oil and equity prices in 2008, Dubai's real estate market began a collapse that roughly halved residential prices in 12 months and forced the restructuring of tens of billions of dollars of corporate debt.
So oil's current slide is being watched closely in Dubai. During the last slump, a sharp downturn in the Dubai stock market preceded the beginning of the property crash by about nine months; the stock index is now down 37 percent from its May 2014 peak.
This time around, however, there are major differences. The United Arab Emirates has built up huge fiscal reserves which are expected to let the government keep spending heavily, insulating the economy from the reduction in oil revenues.