By Staff writer
Propertyfinder Group says currency moves are making UAE homes more expensive for foreign investors
A further strengthening of the UAE dirham is set to weigh on the country’s real estate sector this year by making homes more expensive for foreign investors, according to Dubai-based Propertyfinder Group.
The real estate company said that in some cases it has seen European expats shifting their attentions back to their home markets by liquidating UAE property assets to take advantage of favourable currency exchange.
The dollar, to which the dirham is pegged, hit a 31-year high versus the pound this month and is within $0.02 of a five-year peak against the euro.
Lukman Hajje, Propertyfinder Group CCO said: “A stronger dollar makes UAE property more expensive and less attractive for both locals and non-locals alike.
“We've seen clear evidence on propertyfinder.ae of UAE property prices declining as the dollar has strengthened. We saw this in the second half of 2016 in the Brexit aftermath as British and European expats shifted their attentions back to their home markets which suddenly became more attractive, in many cases liquidating UAE property assets to take advantage of favorable currency exchange.”
He said Dubai property prices saw single-digit declines in 2016, but with the dirham rising 16 percent against the pound and achieving small gains versus both the euro and Indian rupee, property sellers could still enjoy a tidy foreign exchange profit on top of any capital increases.
“This stimulated UAE sales activities, but decreased local prices,” said Hajje. “We expect to see more of this as the dollar strengthens further.”
He added: “While the fundamentals of the UAE property market remain strong, restrictive lending practices make the market even more costly to get into.
“This takes a big chunk of potential buyers out of play, particularly those living and working in the UAE who'd like to get out of the endless rent spiral but just can't afford to.”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.