The easiest and quickest way to get a feel for what’s really happening in the Dubai property market is to ring any estate agent. Most of them are equally rubbish, so doesn’t really matter which.
The conversation goes something like this: You start off by saying “Hi, I was ringing about” – at which point the agent will immediately cut you off. “I’m here now, in Dubai Marina. Come immediately.”
He will send you his exact location, along with instructions to bring your cheque book. Usually there is “personal” story added, such as the landlord’s mother has fallen seriously ill, so he has had to rush back to Venezuela and needs a quick deal now – hence this property is actually priced at 20 percent less than all the others in the same building.
Upon meeting the agent, he will explain that the property has already been booked by another viewer just moments ago. “But I like you. Let’s close this now and the flat is yours.”
The measures taken by the Dubai government to both stimulate growth and at the same time make it harder for flippers to skew the market are gradually leading to a more stable market
Desperate agents mean only one thing: property prices are falling. Don’t just take my word for it: Apartment prices on the Palm Jumeirah, one of Dubai’s most popular places to live, fell by 9.5 percent during 2018, according to the latest UAE Property Report by Savills. It also showed that capital values across Dubai Marina and Jumeirah Lake Towers, popular with expats, dropped by 5-7 percent in the same period. It added that prices for apartments in Downtown Dubai were down by 16 percent while values in the Burj Khalifa were 12 percent lower than the 2017 average.
Across the villa and townhouse segment, capital values on an average were down by 9 percent in Arabian Ranches, 12 percent in Meadows and Palm Jumeirah and around 14 percent at Jumeirah Park when compared to December 2017.
Savills said Dubai’s residential real estate market was firmly in a correction phase during 2018 with inventory levels piling up across micro-markets as large schemes launched during 2014 – 2016 were handed over to the market. A slowdown in global trade and financial markets also weighed down on demand.
The report said that transaction activity declined by approximately 22 percent compared to the year earlier period and buyers adopted a wait-and-watch approach.
Part of this is simply down to oversupply, as the report suggests. A total of 21,700 residential units were delivered in Dubai in 2018, the highest number of completions since 2011, according to different research by Dubai-based real estate agency CORE.
Maybe the seven-year cycle is nonsense and was made up by some dodgy property agents
Now this doesn’t all mean doom and gloom. Nobody can deny that prices are falling – but a correction is a long way from a crash. The various measures taken by the Dubai government to both stimulate growth and at the same time make it harder for flippers to skew the market are gradually leading to a more stable market. And of course, a lower base line.
But that can only be a good thing. The days of investing in property in the hope of doubling your money in two years are long gone – and so they should be. That is good for investors, for end users, and ultimately, for the property giants.
The only question no-one can answer is, how long before stability? Many experts talk about the “seven-year cycle”. But if that started in 2009 during the crash, we are now three years past it. If it started in 2014, at the last peak for prices, we have two more years to go.
Or maybe the seven-year cycle is nonsense and was made up by some dodgy property agents.
As Emaar chairman Mohamed Alabbar told this magazine late last year: “This is human nature, we all want more. Whatever the price, we want it to be higher. But as (Dubai Ruler) His Highness Sheikh Mohammed Bin Rashid Al Maktoum keeps telling me, there is night and day and there is winter and summer. The question really is, are you able to deal with your business and manage your business in this stage of the cycle? Because cycles come and go.”
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