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Fri 7 Aug 2015 01:01 AM

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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'

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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John Alatontee 4 years ago

The gov. action to increase the fees to a 4% literally brought the market to a full stop! the truth is that investors and real estate agents can no longer make a decent margin...so naturally they would exit the market...hence the price decline.
Bring down the fee to a 2% and you will see how hot this market would be.

Bob 4 years ago

The media always seems to be concerned for the poor investors and real estate agents in the Dubai market - what about the normal people who live and work here and would love to buy a property but can't because of the overinflated prices in the market driven up by these 'poor' investors and agents?

I would love to buy here - but would rather put my money into a safer and more realistic market at home in Scotland where it fluctuates in a realistic manner, than risk it here on an overpriced property.

Property should never be a short term investment such as it is here.

Let the market correct itself to real prices (still got a long long way to go!!) and then see the market trade fairly when real people earning normal money can invest in homes to actually live in and not just line the pockets of short term property investors and unscrupulous real estate agents. I bet there are many people who want to buy a property here and are forced out of the market by greedy investors.

John Smith 4 years ago

John I think your response illustrates the problem. When there was demand flippers and agents could make good money by exploiting shortages in prime locations. Now the demand has gone (nothing to do with fees) the good old days are over for the flippers.