Dubai Property Market Softens
As the Dubai property market softens, what is causing the property price decline? Dubai property prices fell by 10 percent year-on-year during the first quarter of 2016. What will a this mean for property investors in the short medium and long-term? The Dubai property market fall, seen in Q1 2016 is a continuation from 2015; which was a bad year for the Dubai property market. Global economic conditions negatively impacted Dubai property prices. The wider negative outlook which has lead to uncertainty. Therefore this uncertainty has limited the investment appetite from traditional property investors from Europe and Russia. Consultancy firm JLL said in its Real Estate Market Overview that the Dubai Property market has softened due to the extended period of Dollar strength and lower oil prices, which has weakened the purchasing power of buyers across the region.
Read More: Dubai Property Market forecast Q3
An abundance of New Stock Causing The Price Decline
According to Consultancy firm Asteco; Further falls in value are expected in the next 18 months for both Dubai Property prices and rental; caused by the substantial supply of housing stock due for handover. Furthermore, this will have a knock-on effect in the Northern Emirates of the UAE. If Dubai property market continues to soften; especially in rental values, we could see decreasing rental prices in Sharjah and Ajman. The Dubai Property Market experienced a 3% fall in rentals. Apartment rentals quarter-on-quarter and a 2 % decline in sales during the same period. Reports say rents have fallen by 5% year-on-year. An abundance of new stock coming onto the market have diluted the property prices in Dubai. 2,200 new homes were completed in Q1 2016. With a further 27,000 units scheduled for completion inside 2016. Despite the current trend of the Dubai property market losing value; consultancy firm JLL say that the prospects for the Dubai property market remain healthy. Emaar Properties’ new tower; taller than the world’s tallest Burj Khalifa shows positive market sentiment.
New Infrastructure Projects Can Reverse the Trend
Asteco believes, in the medium to long-term, the major infrastructure projects, such as the Dubai World Central (DWC), Al Maktoum International Airport and Expo 2020, will all continue to create employment opportunities and therefore increase the housing demand.