Dubai property will return to growth path in 2016-17


Dubai property will return to growth path in 2016-17
Dubai's real estate market peaked in October 2014 at levels higher than those achieved in August 2008. Photo by Rahul Gajjar

Dubai - Drop in prices is a healthy market adjustment, says report

By Issac John (Associate Business Editor)

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Published: Thu 9 Jul 2015, 8:10 PM

Last updated: Fri 10 Jul 2015, 11:47 AM

Declining apartment and villa prices in Dubai will stabilise during 2016 and return to growth later in the year or in 2017, a leading realty company said.
According to Core Savills, recent data suggests that Dubai’s real estate market peaked in October 2014 at levels higher than those achieved in August 2008, and that Dubai’s residential sales market has softened steadily by a compounded average of 1.2 per cent per month for apartments and 0.7 per cent for villas since then.
In a statement, Core Savills said it expects a return to growth as Dubai gears up for Expo 2020, and has welcomed the drop in prices as a healthy and positive market adjustment after the strong growth numbers posted in 2014.
Core Savills has advised buyers looking to enter the market to focus on the right product prices at today’s market level, and to expect reasonably higher rental yields with capital appreciation to follow in the mid- to long-term.
Citing reasons for the softening prices, the Core Savills report mentions several external factors such as regional instability issues, global macroeconomic concerns. In particular, a Chinese crackdown on capital outflows, Russian sanctions and the falling ruble, the appreciating dollar and overall eurozone issues are mentioned as making their mark on Dubai’s residential market.
The steady nature of the price correction, however, is touted as a sign that Dubai’s real estate sector is maturing thanks to investors with longer term vision and a market that overall is deeper than 2008. For these reasons, Dubai is in a better position today to absorb external economic shocks than it was in 2008.
Taking a closer look at the office sector in Dubai, the research shows the sector will remain stable, with a steady growth forecast and greater choice for tenants as the city continues to be well positioned to offer companies a competitively priced choice for investment and growth.
Since Dubai is viewed as a great place to do business, Downtown Dubai and the DIFC are now considered by many to be the unified central business district for the entire region and foreign companies are still happy to pay a premium to open offices in these prime locations. This is resulting in extremely low vacancy rates in the sector.
“Our most recent report comes after deep analysis of different segments of the real estate market. It aims to give our clients research-backed advice to guide their rental and investment decisions, and to inform landlords and tenants on market movements in key areas. We are confident that the residential sales market will return to growth during 2016 after a period of healthy price decline. An adjustment, however, does not mean crisis — on the contrary, a healthy softening is what Dubai really needs to give renewed confidence to long-term investors that the real estate market has matured and gained more depth and liquidity,” said David Godchaux, CEO of Core Savills.

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