House prices in the UAE are set to decline a further 25-30 percent this year and next due to a rising oversupply of property, investment bank Rasmala has said in a new report.
Analysts said they saw depopulation risk and supply and demand issues as "key headwinds" facing the country's real estate market.
"We believe the UAE property sector is undergoing mid-cycle dynamics; house prices have corrected by 45-55 percent, but rising oversupply could see a further 25-30 percent drop in the next two years," Rasmala said.
"While supply dynamics may be somewhat different for Dubai and Abu Dhabi in terms of volumes, their demand dynamics almost mirror each other – a low appetite for new housing as financing remains tight and negative equity concerns linger," the report added.
“The good news is that much of the property correction is already accounted for.”
Dubai property prices slumped 62 percent from their peak in mid-2008 after the global credit crisis caused mortgage lending to dry up and speculative demand waned, Deutsche Bank AG said on February 14.
In neighbouring Abu Dhabi, prices slid 45 percent, Jones Lang LaSalle estimated.For all the latest business 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.
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