Dubai’s real estate market which saw a peak in late 2014 has gradually declined up until this year. However, property prices are set to stabilize and will be on the rise by 2016.
Core Savills Reports
One of the biggest commercial and leading real estate firms in Dubai, Core Savills, has released research which indicates that falling villa and apartment prices since October 2014 (which were far higher compared to mid-2008), will stabilize and growth is expected not only in 2016, but 2017 as well.
Even though Dubai’s residential sales market for apartments has steadily declined by an average 1.2% per month, and 0.7% for villas, a return to growth is expected, especially since Dubai is getting ready to host EXPO 2020. Core Savills sees the temporary drop in prices as a healthy market adjustment parameter, given the marked growth numbers seen in late 2014.
The report also advises buyers to focus on product prices at the current market level and enjoy noticeably improved rental yields as they can expect capital appreciation to follow suite in the mid to long run.
It should be noted that a number of factors account for the ‘price softening’ – namely external factors like regional instability and global macroeconomic issues, the Chinese crackdown on capital outflows, the Russian sanctions as well as the appreciating US dollar, to name a few. All of this will leave its mark on Dubai’s real estate market.
This steady price-correction scenario though, is a sign that the real estate sector is indeed maturing due to an increasing number of far-sighted investors as well as a market that’s generally deeper, compared to, say, 2008.
The office space sector for example, will enjoy stability with steady growth as tenants will have more diverse choices – the Dubai realty market is positioning itself to offer companies even better pricing options in terms of growth as well as investment.
Dubai is seen as a great place for conducting business, in fact, Downtown and DIFC are considered a central business hub – foreign organizations in particular, are happy to pay premiums to have their office spaces set up in these prime locations. As one might imagine, the vacancy rate is quite low here.
Core Savills CEO, David Godchaux, adds that their most recent report is the result of a deep analysis on different Dubai real estate market segments. And that the chief aim of the report is to provide buyers, landlords and tenants with key market movement data. He further adds that 2016 is going to be a good year in terms of residential sales, particularly given the healthy price decline since late 2014.
He concluded by saying that this “healthy softening” is just what Dubai needs to win the confidence of long-term investors, as the Dubai real estate market has matured and enjoyed more depth as well as liquidity.
More Research Reveals Similar Facts
Asteco, a property management firm doing business in Dubai since 1985, reports that a significant decline in rent is expected in 2016 as real estate projects are completed by the numbers – at least 12,000 apartments and 2,000 villas will be entering the market this year, which underpins the predicted softening of sales activity in 2015.
A bright outlook for 2016 is indeed expected.