Dubai’s real estate market, which has seen prices fall during the first half of this year, will return to growth by 2016, according to a new report by real estate website Bayut.com.
Its report said that concerns voiced about the Dubai property slowdown have been “exaggerated and inflated”, adding that the market is undergoing a “much-needed easing that would help it paddle away from troubled speculative waters”.
Bayut said property sale values dropped between 5-10 percent in H1 2015 compared to the same period in 2014 while rental returns continued to hold strong, with some areas even registering growth in values.
“Though the slowdown continues, it will only be sometime before things turn around and head upwards. We reckon things will move the other way come 2016 and rise there from, and our optimism banks on bright prospects of a continuous rise in the emirate’s population, its status as a top tourist resort, its world-class leisure and hospitality facilities, and its importance as the core regional business hub,” said Bayut.
It added that the market was continuing to adjust “to shed off the excessive weight of prices it put on as the values rose over the past few years”.
Bayut’s report said: “Although the slowdown has driven out flippers eyeing quick gains, herein lies a chance for long-term players to make a calculated move and be prepared with the right arsenal once the battle heats up in the coming months.”
The report also questioned reports that 25,000 new units are entering the market this year, with Bayut estimating the true number will be around 15,000 new units.
“From what we have seen, some project deliveries in H1 2015 coupled with the delayed impact of the Federal Mortgage Cap contributed to sluggish growth in the residential sector. Most investors opted to hold on to their properties and sit out the correction period, while trying to secure rental income in the meantime,” the report said.
Bayut said the first half of 2015 recorded continued growth in the rental and hospitality sectors in Abu Dhabi.
At the same time, residential sales, retail and office sectors remained stable.
Following the approximately 11 percent growth in 2014, residential rental growth continued during H1 2015 owing to the limited quality supply across all prominent locations and the removal of the rental cap, the report said, adding that the residential sales market remained stable, following the double-figure growth in 2014.
“From an economic angle, the property market of the capital remained resilient despite the oil crunch. The Abu Dhabi Urban Planning Council approved 22 new projects during the first three months of 2015, thus shrugging off all concerns of weaker oil prices affecting the property market.”
Haider Ali Khan, CEO of Bayut.com, added: “Dubai is a reality that cannot be ignored anymore, not for long at least. The emirate has evolved into a quality travel and tourism destination and an important regional business hub bridging the West and East, leading to bright prospects for the emirate’s job market in the coming months and years. We are likely to see heightened activity in the realty sector in the near future that will shun away notions of a market deadening or crash.”
By Staff writer