Dubai house prices are bottoming out in 2017, according to new data, which sees the emirate’s recent slump in values come to an end.

Dubai’s property market rebounded rapidly from the financial crisis, leading to rocketing house prices and a surge in demand from investors. In recent years, though, the market has cooled, partly thanks to cooling measures introduced by the government. Data from Propertyfinder Group shows that prices have been falling since 2014, taking values to levels last seen in 2013. In the 18 months to April 2017, meanwhile, median property sales prices have fallen 20 per cent, while median rental prices have fallen 21 per cent.

Dubai is “far more complete, more regulated and far more mature” than it was, Propertyfinder’s CCO Lukman Hajje said in a statement.

The slowdown is the opposite of the overheated trends recorded in New York and Hong Kong, where supply has been shrinking. Indeed, with 28,000 new units set to be released by the end of 2017, Dubai’s growing stock levels may see prices remain low for another year, but Propertyfinder’s research shows that the decline is slowing down, as the market bottoms out.

At the same time, brokers report rising interest from investors, attracted by the reliable yields on more affordable properties.

“In the popular Springs community, it is now possible to achieve net yields of up to 6.5 per cent and net returns on equity of circa 10 per cent for finance buyers using 75 per cent loan-to-value mortgage products,” John Lyons, Head of Sales & Leasing at Espace Real Estate, a Propertyfinder client, tells Arabian Business. “This provides great financial incentive to buy rather than rent.”

World Expo 2020 looming on the horizon is also expected to boost investment demand and, as a result, price growth in the coming years.

Dubai property prices off to positive start in 2017

17th February 2017

Dubai property prices have enjoyed a positive start to 2017, according to new figures.

The latest Property Monitor Index (PMI) from Cavendish Maxwell shows that residential values in some communities within the emirate have begun to see positive month-on-month growth for the first time in 12 months.

Al Furjan, Discovery Gardens and Dubai Silicon Oasis, among other areas, saw prices edge higher by up to 0.12 per cent in January, says the platform, which is the only one to be offered by a RICS-approved agency.

“In January we began seeing a change in our monthly PMI, with some areas showing a growth month-on-month,” Lynnette Abad, partner at Property Monitor, tells Arabian Business.

“Since the index tracks live transactional data from agents, valuations and our in-house database, these changes are a reflection of the direction of the market.”

Cavendish Maxwell’s latest survey of estate agents also found that the majority now expect buyer enquiries and sales to climb in the first three months of the year – an improvement upon 2015’s final quarter.

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Dubai property prices set to recover in 2017

22nd November 2016

Dubai property prices are forecast to bottom out in 2017, according to new research from Cluttons.

The real estate consultancy’s latest report reveals that average residential property prices dipped by 2.6 per cent in the third quarter of 2016, taking the annual rate of decline to 7.4 per cent. As a result prices are now 26.7 per cent below their market peak in 2008. The firm’s Winter 2016/2017 market overview predicts that house prices and rents in the emirate will end 2016 around 10 per cent lower than 2015, with the rate of decline to slow next year, before bottoming out after the summer.

That recovery will be triggered by both the balance of supply and demand, which Cluttons says is “almost in-sync currently”, although it can “quickly be upset by a supply surge”, as well the positive boost of the looming Dubai Expo 2020, which is already driving a range of infrastructure projects.

Murray Strang, head of Cluttons Dubai, tells Arabian Business: “Although our view of 2017 indicates positive signs to reverse the market’s fortunes, we are closely monitoring the level of residential supply coming to the market. With 34,000 units announced this year, it’s clear that project announcements are continuing at an unrestrained pace, despite what could be perceived to be challenging trading conditions.

“If supply continues to increase in the next 12 to 18 months, as the global economy remains unstable, it is likely to cause the current stability and projected bottoming out of the real estate market to unravel, with further price falls likely to follow suit.”

Transaction volumes in the third quarter fell 21 per cent, led by a drop in apartment transactions.

“It is clear the residential sales market is still softening and the magnitude of declines, has, on average, intensified over the past six months,” says Cluttons’ report. “There have of course been markets where values appear to have bottomed out, suggesting, as we previously highlighted, that some submarkets may have found their new price floor, but there remain a few quarters of further falls yet.”

“Worst is over” for Dubai house prices

31st October 2016

The worst is over for Dubai house prices, Nakheel has declared, as the Dubai developer prepares for market growth in 2017.

The emirate has seen its real estate cool in the last year, with values correcting after a strong period of growth. Nakheel, though, is positive about the market’s outlook.

“I think the worst is over,” sais Nakheel PJSC Chairman Ali Rashid Lootah in an interview with Bloomberg in Singapore. “Dubai is growing, we are seeing signs of more inquiries – serious inquiries – and I think that’s a sign of recovery. The market is maturing, we are seeing more serious, cautious investors, not speculators.”

His comments arrive as new figures are released by ValuStrat, which show that Dubai property prices edged down 0.6 per cent in the year to Q3 2016.

Indeed, according to the Dubai Land Department (DLD), Dubai property sales values slipped 30 per cent in the first seven months of 2016. Data from Bayut.com also highlights falling rents in the emirate’s apartment market, with rates dropping 2 per cent quarter-on-quarter in Q3 2016 to AED125,000 per annum.

Phidar’s house price index, also recently published, confirmed that prices continued to drop in the three months to September 2016, with sales prices down 4.1 per cent and apartment lease rates down 3.4 per cent. That, however, pushed up gross yields to 7.9 per cent, while lease rates for villas dropping 1.8 per cent, combined with sales prices falling 4.8 per cent, pushing up gross yields to 4.9 per cent.

However, ValuStrat’s figures, which analyses 26 freehold locations in Dubai on a monthly basis, reveals that apartment prices are now on the rise. Prime property in Downtown Dubai has also seen a positive correction over the last six months.

“Even though sales transaction volumes came down in Q3, which is expected during the quieter summer months, DLD transacted sale prices for residential apartments have increased noticeably at 6.6 per cent annually and 5.2 per cent on a quarterly basis,” comments ValuStrat Research Manager Haider Tuaima.

Residential investment yields are strongest in the market’s mid-affordable locations, notes ValuStrat, where they range between 6.5 per cent and 7 per cent.

Overseas investors, meanwhile, certainly appear optimistic: the UAE has been in the top 10 most popular destinations on TheMoveChannel.com for seven out of the first nine months of the year.

For more on Dubai’s changing market, read our interview with Nakheel from this year’s Dubai Property Show.

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