Dubai real estate market correction 'normal and inevitable'

Cityscape Global organisers allay fears over 2015 market slump, says medium-term prospects remain positive
Dubai real estate market correction 'normal and inevitable'
By Staff writer
Fri 07 Aug 2015 01:01 AM

The recent price declines in Dubai's property market are part of a "normal correction which was always inevitable", according to the organiser of Cityscape Global that takes place in the emirate next month.

Wouter Molman, director of Cityscape Group, said conditions in Dubai are being shaped naturally, and that medium to long-term prospects remain positive.

Following significant increases in sale prices and rents during 2014, Dubai's market has seen declines in both since the end of last year.

Molman said end-users are set to capitalise on stabilisation within the Dubai real estate market as more affordable housing options enter the market ahead of Expo 2020, and price adjustments improve affordability of existing stock.

"We must understand that Dubai is experiencing a normal market correction which was always inevitable," said Molman.

"The Expo 2020 win caused a sharp rise in property prices at the end of 2014, but the steps taken by the government have helped regulate the market and the establishment of a rent index has created more clarity for investors – all signs of a maturing market."

He said developers are lining up to unveil a wave of new housing options during the 14th edition of Cityscape Global which brings together more than 300 exhibitors from 30 different countries on September 8-10.

Supported by the Dubai Land Department, Cityscape Global is the annual meeting point for key real estate investors, developers, investment promotion authorities, architects, designers and other real estate professionals to drive growth in real estate investment and development across emerging markets globally.

Molman said that in the wake of recent market reports the event will help put into perspective the much brighter longer term reality of the Dubai property market.

"While a lot of the figures we are currently witnessing are not as positive as we’ve seen in previous years, it seems clear that the medium to long-term future for Dubai real estate is healthy," said Molman. "This is reflected in the build-up to the 14th edition of Cityscape Global, where we expect the biggest assembly of exhibitors since 2008."

Craig Plumb, head of research at JLL MENA, added: "We expect transaction volumes and, subsequently sale prices, to drop further in the second half of the year. But the single digit price correction we saw in the first half of the year is a sharp contrast to declines we witnessed in 2008/2009 and is a clear indication that the market is maturing."

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