Real estate prices in Dubai will continue declining in 2017, with a recovery only starting late next year, property consultancy Cluttons said.
Home values in the emirate dropped 7.4 percent on an annual basis at the end of the third quarter and will probably slip another 5 percent next year, Cluttons head of research Faisal Durrani said in an interview Sunday in Dubai. Prices have been falling since 2014 and are almost 27 percent lower than their peak in the third quarter of 2008, he said. Values will only begin to stabilize in the last three months of next year, driven by government spending on projects related to Dubai’s hosting of the World Expo in 2020.
Real estate transactions in the emirate fell almost 30 percent by value in the first seven months of the year, according to data from the Dubai Land Department, as a slump in oil prices led to an economic slowdown in Gulf countries. Cluttons joins other real estate analysts forecasting either a flat market or further slowdown in 2017. Jesse Downs, managing director at consultant Phidar Advisory, predicts a 10 percent drop after a 7 percent slide this year.
“Government spending on projects related to the Expo 2020 will help create jobs and stimulate demand, but the impact of that will not start to be felt for another six to nine months,” Durrani said. “In the meantime, stubborn sellers at the top end of the market who had been holding out over the past 12 months are now facing reality.”
Luxury Sales Hit
Average villa prices in the emirate were dragged down by properties at the top end of the market, according to a Dubai real estate report published by Cluttons on Sunday. Prices in locations like the Palm Jumeriah, a man-made island, and The Meadows have slumped 11.9 percent and 11.1 percent respectively over the past 12 months. Apartment prices fell by 2.5 percent in the third quarter, the fastest drop since mid-2011, Cluttons said.
Dubai’s property market is bottoming out as buyers return to the market and the emirate offers an alternative to investors worried about the U.K.’s Brexit vote, Nakheel PJSC Chairman Ali Rashid Lootah said in an interview with Bloomberg last month. Demand was coming from “serious, cautious investors, not speculators,” he said. The company is one of Dubai’s main real-estate companies.
Lower oil prices and weaker economic growth mean that real estate prices across the Gulf Cooperation Council region, which also includes Bahrain, Oman, Kuwait, Saudi Arabia and Qatar, are falling to fresh lows, Durrani said.