Dubai’s Real Estate Sector Shows Signs of Slowing
According to the latest Dubai Real Estate Tracker survey published by UAE bankers Emirates NBD, the majority of real estate agents in Dubai are suggesting that price declines over the last three months strongly indicate a slowdown in its property market.
Just 13% of the estate agents surveyed by the bank in the report, produced by financial information services provider Markit, recorded increasing sale values. An alarming 60% of respondents are of the opinion that Dubai’s real estate market has embarked on a downward spiral, reflecting a general loss of appetite among international property investors.
The latest data from buyer enquiries generated by estate agents in the Emirate shows that softer market conditions have resulted in great caution among buyers in the last three months, with 54% of agents noting declining investor sentiment over the period.
Khatija Haque, head of MENA research at Emirates NBD said: " The Dubai Real Estate Tracker survey is consistent with price data and shows a further slowing in the residential real estate sector over the summer months. While the slowdown is partly seasonal, other factors including concerns about the economic outlook and US dollar strength have weighed on demand ".
The survey confirms increasing reports from leading analysts and consulting firms in the UAE that prices for property in Dubai are witnessing a sharp decline as the real estate sector continues to soften.
Global real estate consultants CBRE recently revealed that property sales in Dubai during the third quarter of the year were around 2% lower than the sales during the previous quarter, while property prices declined by 6% over the same period. Price data shows that property values in Dubai’s residential market are currently 3.1% lower from the same period a year ago and 21% below the 2008 market peak.
Nevertheless, the Dubai Real Estate Tracker indicates a rebound in confidence in its outlook for the next 12 months, with 45% of agents expecting a rise in average property prices, outstripping the 30% forecasting further declines.
Rents in Dubai’s residential segment remained stable over the three months to August, with estate agents reporting both a rise in newly-agreed rentals and increasing levels of new enquiries, according to the survey. " However, the lettings market remains robust both in terms of the volume and price, suggesting that population dynamics are supportive of the real estate sector, " adds Khatija.
Some real estate professionals believe that the current downturn in Dubai’s property market is better characterised as a stabilisation rather than a softening and remain of the opinion that the time is right for a price correction, following the rapid growth experienced over the last two years. Fears of a potential property bubble have now been replaced with growing confidence that stabilisation in Dubai’s real estate sector will continue to attract investment from overseas.
The report shows that residential real estate prices and sales volumes for apartments in the Emirate appear to be holding up better than villa prices, with just 56.8% of agents reporting declining apartment prices compared with 62.2% recording lower villa sale values.
The survey covered nine apartment communities and five villa communities in investor zones in Dubai and showed declines of 2.7% and 2.6% for apartments and villas respectively over the research period. However, transaction volumes remain broadly unchanged, indicating there is still a healthy appetite for investment property in the Emirate and declining prices may actually go some way to boosting buyer interest in the coming months.
Article by +Roxanne James on behalf of Propertyshowrooms.com
