Dubai Residential Property Market Seems Stable, according to new Report
The mainstream residential property market in Dubai experienced a year-on-year fall in prices of 9%, however, the REIDIN sale price index showed little change, remaining relatively level from one month to another across the twelve month period, a recent Knight Frank report reveals. Villas and apartments – both property classes that are prime targets for Dubai’s many foreign investors – showed no noticeable changes.
Indeed, while prices have been slipping on Dubai’s residential properties, Knight Frank’s analysis paints a somewhat different picture for the prime sector over the twelve months to April. With the prime price index in the twelve months to April only down 5% from the preceding twelve months, the prime market has been outperforming the mainstream. Prime apartments performed more strongly than villas. In quarterly terms, apartments even managed to deliver price growth at one point in the twelve month period. Between the final quarter of last year and the first three months of 2016, prime apartment prices managed to appreciate by 2%. Ultimately, though, there was no significant change over the twelve month period for either villas or apartments.
In its report, Knight Frank points to a number of factors that have helped to keep prices under control and will most likely continue to do so in the future. Developers are in general agreement for the need to control new residential supply to keep it in step with demand. Perhaps the most significant factor at play, though, is the approach of Expo 2020. Dubai is to play host to the major event, which is expected to be a major stimulus for the emirate’s property market and wider economy.
While the effect of Expo 2020 is not yet in evidence and neither, according to most experts, can it be confidently predicted at this early stage, pretty much everybody is agreed that it will be a good thing and this helps maintain confidence in Dubai as an investment market. On a more practical level, the government is carrying out a major program of investment in preparation. This is already underway, and the improvements to Dubai’s infrastructure and public amenities are doing much to shore up the property market and to maintain overall stability in spite of price shrinkages in the mainstream residential sector.
The Knight Frank report notes that a number of factors that are currently uncertain will have an impact on Dubai’s economy and international appetite for the emirate’s properties in the near-term. These include the US presidential election, oil prices, and the UK’s withdrawal from the EU. These make it hard to predict when depreciation will end and the market will enter its next boom cycle, but the report predicts things will fully stabilise by the end of the year and start heading upwards in early 2017.