Residential real estate prices in Dubai were up to 10 percent lower in the second quarter of 2015 compared to the same period last year, according to a new report.
Tasweek Real Estate Development said in its Q2 report that prices peaked in 2014 but sales prices and rents could edge back up in Dubai during the remainder of the year.
The report said the UAE property sector "exceeded expectations" in Q2, with industry-wide economic diversification seen as the key driver to sustained growth.
"Moving forward, Abu Dhabi rents are expected to maintain growth, while Dubai is expected to challenge and eventually overcome price fluctuations," it added.
Tasweek said Abu Dhabi and Dubai markets experienced price corrections specifically for freehold units between April and June.
Retail and commercial spaces are expected to be more resilient than hospitality given the sizable supply of hotel rooms expected in anticipation of Dubai Expo 2020, Tasweek added in the report.
Masood Al Awar, CEO, Tasweek, said: “As we foresaw in the past quarter, the primary markets of Dubai and Abu Dhabi underwent price corrections in Q2 that will most probably result in moderate upward market movements throughout the rest of the year.
"With global oil prices sharply declining since mid-2014, real estate economic diversification has taken centre stage as the driver of growth in the UAE and across the region, which will have a positive spillover effect on the real estate business. Given the recent market shifts, the next half of 2015 will be an important indicator of how our industry will fare in the short to medium term as the UAE gears up for Expo 2020.”
In Abu Dhabi Tasweek’s Q2 market research showed that the residential market sustained the Q1 trend of landlords protecting rental levels by reducing supply. Demand softened in Q2, though, with the stable prices reflecting no changes over Q1. Overall, rental prices were flat in Abu Dhabi island and in the outlying freehold areas.
In Dubai, residential rates fell due to weak demand for luxury properties, sliding oil prices and a stronger US dollar, according to Tasweek. On average, sales prices in the emirate decreased by between 5 and 10 percent compared to 2014.
Average rents for studio and one-bedroom units fell 3 percent, although 2- and 3-bedroom rates rose from 5 to 10 percent, it said.
Dubai’s office business for Q2 saw a 5 percent increase in prices, Tasweek's report added.
“The high level of diversification, population growth, consumer confidence and regulatory support we have been observing over the past months reinforces our belief in sustained local market growth for this year and in the medium term,” said Al Awar.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.
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