Residential property market in Dubai looking stable: report
The residential real estate market in Dubai maintained its stability in the year to April 2016, despite prices falling, according to the latest analysis report on the emirate.
Despite a 9% year on year drop across the mainstream market, the General REIDIN sale price index remained relatively flat on a monthly basis, with no noticeable changes in the performance of both apartments and villas, says the report.
Dubai’s prime market continued to outperform the market average with the prime price index down 5% in the 12 months to April 2016 compared to the previous 12 month period, the report from international real estate firm Knight Frank.
It says that it is encouraging that prices in the prime segment increased 2% on a quarterly basis between the fourth quarter of 2015 and the first quarter of 2016. The performance of prime apartments outweighed that of villas, with the index pointing to a 2% quarterly increase over the same period. In turn, prime villas recorded no significant price change.
The Knight Frank report also says that a number of factors have supported this regulation in prices and are set to support the return of confidence to the market including the government commitment to infrastructure spending.
It points out that while it is too soon to estimate the impact of the Expo 2020 on the residential sector, continued government spending on infrastructure projects geared towards the event such as Route Metro 2020 and Dubai Parks & Resorts will promote confidence in the market and is expected to draw further inward capital.
There is also likely to be some control of supply as there is a general consensus among developers of the need to phase out residential projects in line with demand and strong liquidity with the residential real estate market in Dubai continuing to attract capital from strong liquid markets such as Saudi Arabia and India, two of the traditionally top buyers of real estate in Dubai.
In Abu Dhabi, sale prices remained relatively stable on the back of a shortage in quality residential supply with the General REIDIN sale price index recording a 1% increase year on year in the first quarter of 2016.
The report says that while demand has declined on the back of corporate restructuring and cutbacks in government spending, this has been balanced by a slowdown in the delivery of projects, thus keeping the market steady.
‘Looking ahead, the residential market in the UAE is expected to soften over the second half of the year. While it’s difficult to predict when the next growth cycle will be, we expect the residential market to level out by the end of 2016 before seeing gradual recovery in 2017. We expect prime residential properties will continue to outperform the market average in the short to medium term,’ the report says.
‘We expect Dubai to continue attracting investments both regionally and globally. However the outlook for the emirate in general and the real estate sector in particular depends on a number of fundamentals,’ it explains.
‘Further volatility in oil prices, the European Union referendum in the UK, the US presidential elections in November and ongoing geopolitical tensions are likely to impact the behaviour of currencies, investor sentiment, and demand for property,’ it concludes.
source: property wire
