The outcome of the UK referendum to leave the European Union has certainly been a shock to the global economy. Even though for some time this was a very close vote, it’s fair to say that most analysts did not predict the Leave campaign to win.
One school of analysts notice that expatriates in Dubai are most likely to continue renting their homes instead of switching to ownership, resulting in sales being more negatively affected than the rental sector.
On the other hand, another group are of the opinion that UK passport holders being the third most popular set of people that engage in buying Dubai property, may think twice about buying in Dubai as all of a sudden they have a good alternative option and that is to buy in the UK. The main driver to this is the fall in the value of sterling, which now makes UK house prices that much cheaper when compared to the strong dollar. We all know that a perceived drop in asking prices due to sterling’s weakness will have an effect on buyers possibly parking their hard-earned money in the UK rather than Dubai. However it is also to be noted that the defined drop in value may still be beyond some people’s reach. This "UK alternative " option is acting like a sponge, soaking up interest from buyers who would perhaps otherwise look to Dubai.
Having said this, interests levels have not fallen down with respect to the volume of searches from UK for real estate in Dubai let alone those in Dubai. The Google trends graph below indicates a consistent pattern before and after the announcement of Brexit results (Poll Date: 23rd June, Announcement Date: 24th June). This clearly indicates that we do have plenty of buyers looking, but it’s just their price expectations are nowhere near the expectations of sellers, thus we have a potential stalemate market at the moment. So it could be that for right prices buyers maybe moving quickly for closures.
If external factors stabilize over the rest of the year, it is expected that the Dubai residential market to easily recover in early 2017.