A widely known belief these days is that the value of UAE currency is quite low as compared to the US dollar. At present analysts have a consensus that the UAE Dirham is about 20-30 percent below where it should be with respect to the USD. Even if the dollar-peg remains as it is, there are speculations about a revaluation in the offing. Here is an analysis of a hypothetical situation of 10-15 percent revaluation of UAE dirham
Impact on existing investors
A revaluation of the UAE dirham would translate into a win-win situation due to the fact that the value of their property will rise in the USD in accordance with the revaluation. Even if the property is on mortgage, the debt would increase but still it would be smaller than the actual value of the property (which would have risen of course!).
Impact on new investors
New investors from abroad will be potentially affected by dirham revaluation as it would translate into a price rise for them. Rising prices in turn might affect still new buyers psychologically in that they would take the investment to be a worthwhile one.
The revaluation will have practically no impact on property buyers residing in the UAE, and with their income and savings both within the country.
Future still bright for UAE real estate market
The backup of a booming oil industry in the UAE has protected it from a crisis situation, like that being experienced by the US economy these days. Considering this and the fact that property prices are lower in the UAE as compared to other hot real estate destinations of the world, one can actually foresee a bright future of the UAE real estate sector in the face of dirham revaluation
Jasdeep Kaur works as a property correspondent with Real Estate Dubai.
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