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Imbalances: According to S&P Global Ratings, Retail and residential rentals are expected to remain under pressure in 2019 because of weak market sentiment, increased supply in most markets and segments and a strong dollar. The region is also expected to see lower average daily rates (ADRs) for hotels as supply continues to increase faster than demand, notably in Dubai. This could be attributed to a variety of factors.
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Softening economy: Although higher oil prices will reduce fiscal pressures and some of the GCC governments have announced measures to support the real estate sector, the region hasn’t completely recovered from the slump. Residential property prices have dropped by more than 15 percent since late 2014 and are still falling. The stock market is down 13 percent this year. The fall may be temporary, but the recovery time can't be predicted yet.
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Demographic changes: Although Dubai’s population has grown by 3.5 percent in the first half of 2018, figures show that most growth in the past few years has been in lower-paid jobs such as construction rather than in better compensated, white-collar position. The foreign white- collar workers are crucial to support further demand in the real estate sector, which has seen a significant dip over the last several years.