Dubai property prices seen falling another 3-5pc in next 12 months
Residential property prices in Dubai have declined in five successive quarters and are likely to fall a further 3-5 per cent over the coming year
Residential property prices in Dubai have declined in five successive quarters and are likely to fall a further 3-5 per cent over the next 12 months, industry consultants Cluttons wrote in a report last week.
The real estate sector in Dubai, part of the United Arab Emirates, has been among the most volatile globally over the past decade, swinging from boom to bust to boom again. Home prices had recovered to near peak values last year after falling by about half from 2008 highs, but are now again in retreat.
Prices for houses and apartments fell 0.5 and 0.8 per cent respectively during the three months to September 30, Cluttons wrote, predicting residential prices will fall 3-5 per cent over the following 12 months because of a faltering global economy and an increasing supply of residential units.
Prices dropped 3.5 per cent in the 12 months to the end of September, Cluttons notes, forecasting the keys to 7,400 completed units will be handed over in 2016, 10,300 in 2017 and 13,600 in 2018. Of these, 48 per cent will be houses.
Last week, Mohammed al-Shaibani, chief executive of sovereign fund Investment Corporation of Dubai (ICD) and one of the emirate's most important officials, said Dubai was facing some “oversupply that will take some time to be absorbed”.
The number of apartment sales rose 6.6 per cent in the first nine months of 2015, Cluttons said. It did not state how many units were sold over this period versus a year earlier.
“We've seen the popularity of off-plan property sales persist,” said Steven Morgan, Cluttons Middle East chief executive. This is because so-called “off-plan”, or unfinished units, are 20-30 per cent cheaper than completed stock, he added.
Rents in the city's freehold areas -- districts where foreigners can buy property outright -- fell 3.2 per cent in the 12 months to September 30, Cluttons said.