Dubai property price declines 'to accelerate in coming months'

Tough outlook for jobs market puts pressure on rents and sales, says Phidar Advisory
Dubai property price declines 'to accelerate in coming months'
Construction cranes mix buildings in the skyline on April 9, 2014 in Dubai, United Arab Emirates. Dubai is one of the fastest growing cities in the world. (Getty Images)
By Staff writer
Sun 12 Jun 2016 06:49 PM

The fall in Dubai property values and rents is set to continue over the summer, despite some predictions that the market has bottomed out, a local expert has warned.

In its latest research note, Phidar Advisory said that since Dubai rents peaked in May 2014, the market had declined by an average of -0.3 percent.

However, in May, the monthly rent decline widened to -1.3 percent.

“In a down-cycle, the lowest advertised rent is particularly sensitive to market shifts and can be the harbinger of market trends,” the research said.

“By the beginning of June, the lower limits of asked rents decreased by 4.1 percent compared to the same week of the previous month.

“This is a significant monthly decrease, even for Dubai real estate, a market that regularly experiences annual volatility of 20-30 percent, both on the up- and down-cycles."

Phidar said that although less than 20,000 residential units had been completed over the past year, giving some stability to the market, anecdotal evidence pointing to a pattern of redundancies and slowed job growth – as a result of the impact of the oil price and tighter regional liquidity – might be beginning to take their toll.

“Rent declines usually turn into sale price declines, especially considering the prevalence of yield-sensitive investors,” the research added.

“So, the sale price decline will likely accelerate in the coming months.”

Phidar also said that the oversupply in Dubai’s residential market was expected to remain until 2019.

The firm said that apartment rents had dropped by 1.5 percent during the first half of the second quarter, while sales fell by 3 percent.

Villa rents declined by 3.2 percent, although prices remained stable. In March, real estate consultant ValuStrat said that Dubai property prices may have bottomed out, with values rising slightly in February.

For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.