In the past few months, we have seen that bloggers and analysts have projected the economic condition of Dubai quite undesirable. The fake news has made the investors quite uncertain and fearful. However, if we see the recent data, the economic situation is getting stable and recoil. In the last 3 years the price of real estate assets was quite slow, but now the economic condition as per the spur is getting the recoil.
Since 2014, according to the analyst’s report of GDP, the economic rate of Dubai is growing but at a slow rate which is in relation to the geopolitical tensions and oil prices crash in the region. Last year Dubai showed the very slow growth rate which never happened in the last 7 years. 2018 will be a constant year but the forecast of future growth rate is quite an upside. There is an uprise in the 2019 economy as per the Oxford economics and international monetary fund news. More detailed information on market update is available here, https://www.luxuryproperty.com/dubai-market-update-with-liam-jeffrey .The major credit goes to the government support in terms of change of rules and financial stimulus this year.
In 2018, the Dubai government achieved Dh2.5 billion operating surplus by announcing the huge number of the public budget which is increasing every year at the rate of 20%. The infrastructure has been the major receiver of the budget which accounts for government expenditure of total 21%. This is in relation to the 2021 strategic plan of Dubai as it will be hosting EXPO in just a few months.
The major source of government revenue of most Arab countries including UAE is its high reliance on oil.as with the recent oil crash; most countries reduced and controlled the budget spending which slows down the economic activity while at the same time focusing on earning revenue from non-oil sectors. As countries are increasing their budget and with the revival of oil prices in the past few months the region will get the economic boost for sure.
If we see the Dubai government its major revenue is from oil and tourism. The up rise in the economy will be like a multiplier impact in Dubai. The analysts have projected a quite positive picture of uptick economy with the rise of oil price but the gains are not huge as compared to the loss that happened to the Dubai economy with the lower oil price. However, according to the correlation analysis, the oil prices will not affect the Dubai economy on long-term as the incentives and financial stimulus will lead to the economic growth.
The business activities in Dubai are on rose as per the grassroots analysis. In 2017 the license for onshore companies increased by 6% which got reduced to 2% in 2016. The increase is because of the government support and improved business setup across the UAE.
As per the Dubai economic department, small and medium business workforce counts to be 47% of the total Dubai workforce and from 2009 to 2016 it has increased to 7%. The small and medium enterprises are very important and play a huge role in the development of a country. The Dubai workforce structure of SME is just like countries like New Zealand and United States. The incentives such as loss of penalties and fees, visa deposits refund are mainly targeting the SME sectors and this will stimulate the economic growth of the region.
By looking at the government stimulus that Dubai has offered, there is an inflection point for the real estate prices in the coming year as the fiscal policy plays a very important role in recovering the price of the asset and consumer spending.