Dubai records Dh218b property deals in 2014
Sector sees softening prices after government intervention
Dubai -— Real estate transactions worth over Dh218 billion were recorded in Dubai in 2014, according to an annual report issued by the Dubai Land Department (DLD).
Sales accounted for 51 per cent of the total value of transactions, while mortgages took a 44 per cent share. Real estate agents said that cash investors still outnumber those taking out mortgages in the Dubai market.
The total number of sales transactions reached 38,113, with the value exceeding Dh112 billion. The market recorded 12,511 mortgage deals exceeding Dh97 billion.
Sultan Butti bin Mejren, director-general of DLD, said the real estate market has shown a clear ability to gain momentum from year to year, in addition to maintaining sustainable growth, as well as the trend towards maturity.
However, Craig Plumb, head of research at consultancy Jones Lang LaSalle Mena, said that the value of real estate transactions in Dubai declined in 2014, marking the first decline since the global financial crisis began in 2008-09.
“Data from the DLD shows that the number of sales transactions fell 30 per cent (and the total value of these sales fell by 14 per cent) compared to 2013,” he said.
Anecdotal evidence suggests that Dubai property prices had cooled in the second half of 2014 after heady growth in the initial months.
“The cooling of the Dubai residential market over the past six months has been welcome news for those wishing to buy or rent properties in the city, as it followed two years of very strong growth. This time last year, there was a lot of talk about another bubble in prices, but it is now clear that that bubble no longer exists and prices have shown little or no growth in most areas over the past six months,” added Plumb.
Experts anticipate further softening of the market.
“The first half of 2015 will follow much the same pattern as the second half of 2014, i.e. prices will continue to soften leading up to the summer,” said Mario Volpi, managing director of Ocean View Real Estate.
Concurring with him, Nazia Zaidi, research manager, Chestertons, said: “We expect the market to correct further in to 2015, so that properties will be more affordable for end-users.”
Offering his outlook on the Dubai residential market, Mat Green, head of research and consultancy, CB Richard Ellis Middle East, said: “Overall, we expect the scheduled pipeline of residential units to help constrain inflation in the coming quarters. A fragmented market will continue with certain locations performing independently from the wider market.
“For example, the villa market could be set for deflation in certain areas as a substantial supply of new units starts to emerge from Jumeirah Park, Arabian Ranches, Dubailand and Jumeirah Golf Estates.”
As per DLD satistics, Business Bay registered most apartment sales in 2014, with transactions worth Dh7.20 billion, followed by Dubai Marina. “Business Bay could see increased investor interest as a result of infrastructure upgrades. For the villa segment, we believe traditional areas such as Emirates Hills and Arabian Ranches will continue to attract investors,” said Chesterton’s Zaidi.
JLL’s Plumb forecasted that investor activity is likely to shift to lower-cost locations further from downtown Dubai. “The other area where sales activity will increase is in the corridor to the south of Dubai, out towards the World Expo site at Jebel Ali,” he added.
Commenting on the impact of the oil price slide on UAE property prices, Plumb said the reduction in oil prices means that some overseas investors have less to spend on real estate. “But the dampener on sales price growth over the past six months has been a combination of the stronger dollar (which has reduced the spending power of all overseas investors not earning dollar currency) and tighter restrictions by the market regulators in the UAE.”
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