The institute aims to strengthen ties between Arab and Western civilisations
"While reports from developers and analysts indicate Dubai's real estate market is down, experts on the ground are confirming transactions are up and the state of the market is in line with expectations," said property analysts Allsopp & Allsopp.
Transactions in the first two months of 2016 are up 18 per cent on the same period last year, and month-on-month growth over the last 12 months has increased by 12 per cent.
These figures support data released by Dubai Land Department showing more than Dh68 billion of deals was struck in the first 53 days of 2016, while the department predicts a total Dh300 billion of transactions over the course of the year.
"There are two distinct property markets in Dubai - the investment market and the end-user market. While the investment market is constantly analysed and discussed in media, and yes prices are down, it is a fact transactions are up, especially in the end-user market," said Allsopp & Allsopp's CEO, Lewis Allsopp.
"What we're seeing here is the evolution of a mature property market, where people are buying homes to live in after renting for a few years, then going on to sell those homes and upgrade to larger properties, creating a mature property cycle. It's a fact people are buying homes," said Allsopp. Most analysts and property experts attribute this resilience of the property market against the fall outs of depressed oil price to Dubai's improved regulatory environment, broader investor profile, and increased maturity.
According to a KPMG's review, Dubai's residential real estate market, which has seen price declines for the past year, is likely to witness a rebound in 2017. "While 2016 may be a challenging year due to a number of internal and external factors, the market should see an upturn next year."
While certain areas of Dubai have been more impacted than others in terms of declining prices, the overall magnitude of the decline has been tempered, said KPMG.
It said that this is a result of "vastly improved regulations." Affordable housing areas have incurred lower declines and, in some cases, even maintained value or rental yield, it pointed out. According to Allsopp, while oil prices have a macro effect on markets and play a major role in the dynamics of the region, he questions the effect this has on the retail property market.
"It is important when talking publicly about the property market we segregate the markets into investment and off plan sectors versus end users and ready properties. Oil plays a bigger factor in the investment market, as like oil, gold and many other investments, property, especially an off plan purchase, is generally motivated by turning a profit. Based on the conversations and speculation we are currently seeing in the market it's no surprise investors are holding back to see how markets react."
Allsopp argued that the end user market deserved more attention, as it is a large part of the sector and the economy as a whole that is often overlooked when analysing market conditions.
"How does the oil price affect someone who works in IT? How does it affect a teacher or someone who works in media? I believe the oil price will have little or any effect on such people who are purchasing property to live in - and the numbers back this up. These are people who are buying because they're in the next phase of life and buying a home for their family is the logical step to take. Maybe they need the extra bedroom because they're expecting a child, or maybe they are downgrading or moving to another area to be closer to schools or work. None of these reasons will deter the decision to purchase a new home based on the oil price."
Allsopp points to regulations and measures put in place by the Dubai government after 2008 to prevent another bubble and major correction as reasons for the market dip in 2015.
Loan to value rates were decreased to 65 per cent for purchases over Dh5 million, meaning buyers need to have over a third of the property's value in cash to buy a property. Off plan buyers are asked to pay an additional registration fee of 4 per cent of the contract value at the time of booking and increased transfer fees of four per cent, up from two per cent previously when buying from a developer, were also enacted around the same time, which has added to the cooling measures.
"These measures were put in place for a reason and they are doing the job they're supposed to do, which is to stabilise the market and prevent another bubble. What we're seeing now with the decrease in sale prices is the result of a regulated market acting as it should. The fact we're seeing an increase in sale transactions is further proof of this," said Allsopp.
On whether rents will go down, he said in theory rental prices should fall in parallel with a dip in purchase price. However prices over the last 18 months show there has been little effect on rental prices. "Most landlords in Dubai are not constrained by financial obligations and would rather see the property sit empty than let them fall below their own perceived market value."
Another factor is that while many tenants might start looking for new rental properties, once they realise the hidden costs of moving outweigh any potential savings, they're not moving. As a result, the majority of rentals are being renewed and this keeps prices stable, said Allsopp.
- issacjohn@khaleejtimes.com
The institute aims to strengthen ties between Arab and Western civilisations
Social workers have strongly urged all overstayers to take immediate steps to regularise their status within the stipulated time frame
Some tickets were relisted on resale sites for as much as Dh38,581
Here's a list of the places you can go; entry is free to most of them
Some of the survivors were still recovering at hospitals while others were already in their homes
The vaccines will be flown to Democratic Republic of the Congo, Nigeria, South Africa, Ivory Coast and Cameroon
‘My current position is, to be honest, beyond all my pre-tournament expectations,’ said the tournament host
The confirmed case involved a 51-year-old man, who is currently in stable condition and undergoing treatment