UNITED STATES, WASHINGTON (OBSERVATORY) — Dubai house prices will fall sharply in the next two years, real estate experts polled by Reuters said on Monday, as a slowing economy and rising housing supply herald a further decline in already weak expectations.
Dubai, which has a diversified economy based on trade and tourism, has faced a sharp slowdown in the property market for most of the decade, with the exception of a brief recovery more than five years ago.
The downward trend in Dubai’s housing market activity, which is a key factor in its GDP, is expected to continue.
House prices in Dubai will fall 10 percent this year and 5 percent next year, according to a Reuters poll of market analysts at 11 investment firms and a research institute between August 14 and September 3. It is expected to fall 3.3 percent in 2021.
These views are also driven by concern that global growth has been hit by the trade war between Washington and Beijing, and is consistent with similar polls conducted by Reuters that showed activity in the housing market in the United States, Britain, Canada and India is struggling.
Dubai’s economy grew only 1.94 percent last year, the slowest since the 2009 financial crisis, amid a slowdown in the property market.
Dubai’s economy, which relies on tourism and global corporate services, is now expected to grow 3.8 percent in 2020 and 2.8 percent in 2021, according to the government, but this will mostly depend on external factors.
– “Market Correction” –
A recently announced government stimulus package could trigger a recovery in the real estate market, but the excess supply of housing units is likely to hurt prices and demand.
“There is currently a glut on the market, which is the situation over the last two years,” said Haider Tuema, head of real estate research at Falostrat.
“There have been record numbers of sales projects on the map since 2017 with very successful sales campaigns that promise very attractive post-delivery payment plans for investors over a number of years, impacting the capital values of properties already in Dubai.”
But when asked what might boost the weakening real estate market, most analysts in the poll said that any affordable housing provision would allow for the most upside.
Other options are strong economic performance, visa reforms and Expo 2020.
“Overall, price declines are beneficial for Dubai because prices have been inflated,” said Lynette Abbad, research and data manager at Propertyfinder Group.
“The next new supply will continue to put pressure on prices and we will see a double digit decline, but that will make the cost of housing more affordable.”
Property prices have fallen between 25 and 35 percent since the mid-2014 peak and there will be no halt until at least 2022, the survey showed.
But when asked about what best describes house prices in Dubai on a scale of one to ten, the average was seven, tending to the upside.
“Dubai’s real estate market is correcting as property prices adjust to the new oversupply,” said Shagai Jacob, executive director of Middle East activities at Anarok Real Estate Consultants.
“This benefits consumers who had previously looked to own a property but the price prevented them.”
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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