Average residential property prices fell 10 percent during 2015 and are set to drop further this year, according to a new report by consultancy firm Deloitte.
Its annual Real Estate Predictions Report for Dubai also said that while published pipeline forecasts estimate that some 40,000 units will be delivered in 2016, Deloitte suggested that a more realistic number will be about 10,000 units.
The report said that in 2016, average residential prices will decrease further, "reflecting a transition to a more mature market".
It added that although there may be a softening in residential rental prices in some submarkets, this softening won't be to the same degree of recent declines in residential sales prices.
"Over the past 13 years Dubai has experienced development on a scale and to a standard like no other real estate market globally. Along with other regional and international markets it has suffered the effects of the global financial crisis," said Robin Williamson, managing director, Deloitte Corporate Finance Limited.
"Today, it is now maturing and feeling the effects of various market drivers whilst demonstrating strong resilience in certain sectors."
He added: "Despite the decline in average residential sales prices in Dubai during 2015, price growth over the last four years reflects a compound annual growth rate of 11.6 percent, which outperforms other leading global cities such as London, Paris and Singapore."
Deloitte also said office rental growth in Dubai during 2016 will be slow in some submarkets as a result of supply growth and the power of negotiation will, in general, shift from landlords to tenants.
"There will be a trend towards more mixed use office led developments and a greater allocation of space to amenities, which will enable schemes to differentiate against competition as well as a strategy for developers to diversify risk and generate more robust cash flows," Deloitte said.
It added that given the shortage of high quality office space in Dubai, some companies will be more amenable to leasing additional space than is required at present in order to accommodate future expansion, with a view to subletting surplus space in the short term.
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