Question

​Dubai, one of the seven emirates that form the​ UAE, has a very high proportion of immigrants who account for more than 80 percent of its population. The city has been witnessing a massive growth in the construction sector fuelled by a very high demand for rental space in the city. This in turn led to an impressive increase in the availability of new rental property in Dubai. A substantial downward pressure was thus created on rental rates which declined by more than 50 percent earlier this year. With supply far exceeding the​ demand, industry analysts had earlier predicted a sharper fall in rental​ rates, given the construction boom. Which of the​ following, if​ true, can explain why rental rates in Dubai did not decline​ further?A. Rental rates in Abu​ Dhabi, located just 74 miles​ away, were even lower than those in Dubai.B. Low rents have attracted many foreign​ firms, increasing overseas​ clients' demand for housing.C. The recent recession caused a substantial increase in unemployment in Dubai.D. The UAE still has over​ $50 billion worth of infrastructure projects in the pipeline.E. Construction projects in the UAE have rarely faced any financial bottlenecks.

Answer 1

Answer:B. Low rents have attracted many foreign firms increasing overseas clients' demand for houses.

Step-by-step explanation:

An high price will increase supply and once supply outweigh demand price will fall, in the same vein a low price will increase demand and once demand outweigh supply price will rise.

The low rent in Dubai has attracted more tenants making the tenants to outweigh the housing supply and this has resulted in rent rates not declining further.

The low rate of rent in Abu Dhabi may not influence Dubai rent, a recession will only be cause by low rent but we are interested in why the rent has not fall further, expected increasing building infrastructure and finance will only reduce rent rate.