Dubai house prices to fall further this year: advisory
The emirate's property sector, which went from boom to bust to boom again, has steadied since the government introduced measures last year to cool the market
Dubai house prices are likely to fall further this year as tougher mortgage lending rules, higher transaction fees and rising living costs dampen demand, a report from consultants Cluttons predicted on Wednesday.
The emirate's property sector, which went from boom to bust to boom again, has steadied since the government introduced measures last year to cool the market.
Home values slipped 0.8 percent in the first quarter, leaving average prices 0.5 percent lower than a year earlier and 19.4 percent below the 2008 peak, Cluttons estimated.
Increased supply, the slow motion impact of the new regulations and ebbing sentiment have "weighed heavily on the emirate's residential market", the report states, noting average house prices rose 3.4 percent in 2014 versus 51 percent in 2013.
The report describes the sector's 2015 outlook as "somewhat mute", predicting houses would bear the brunt of price decline although demand was expected to remain "very stable in the medium to long term".
In 2014, Dubai doubled property registration fees and raised minimum mortgage deposits.
Buying a house for 5.5 million dirhams ($1.5 million) now requires upfront equity of 42 percent versus 20 percent previously, Cluttons estimates.
The impact has been marked: about 1,300 houses changed hands in 2014, down 52 percent from a year earlier, while the number of transactions in the first quarter was down 36 percent year-on-year.
"Sustained growth in rents over the past 18 months has exacerbated the challenges of amassing a deposit, while the cost of living has continued to rise," Steve Morgan, Cluttons Middle East chief executive said in the report.
"There may be some respite as the dirham continues to strengthen, driving down inflation."
The UAE dirham is pegged to the dollar. The U.S. currency is up 19 percent against the euro over the past 12 months.
"Sterling, the Indian/Pakistani rupee and euro continue to lose ground to the dollar, making a Dubai-based investment significantly more expensive than this time last year," Faisal Durrani, Cluttons' international research and business development manager, said in the report.
After Emiratis, Indians and Britons were the biggest buyers of Dubai property last year, accounting for 22 and 11 percent respectively of the total transaction value, official data shows.
Cluttons forecasts 12,600 units will be handed over by the end of 2016 and a further 15,800 completions are scheduled for 2017-2018, predicting oversupply was unlikely because Dubai's population is expected to grow.
Dubai's Emaar announces intention to float Egypt unit on Cairo bourseDubai's Emaar Properties announced its intention to float its Egyptian unit on Cairo's bourse but retain an 87 percent stake Financial Markets
Abu Dhabi developer Aldar’s profit buoyed by rental businessAldar has diversified from property sales into rentals, hotels Business
Bulgari, Dubai developer Meraas to build luxury propertiesMeraas is controlled by Dubai's ruler, Sheikh Mohammed bin Rashid Al Maktoum Property
Abu Dhabi faces ‘major shortage’ of affordable housingCityscape exhibition hears of ‘huge mismatch’ between property prices and the average UAE salary Property
Dubai’s Emaar Properties forecasts 2015 profit above market estimatesThis is higher than the $916 mln average forecast for net profit this year by eight analysts Property
Firm aims to deliver ‘affordable luxury’ to Saudi youthSultan Batterjee said his company is concerned with not just developing properties but nurturing communities Property
Saudis confident in property market, but want better infrastructureThe YouGov survey found that 58 percent of those asked believed that at the very least, property prices would remain constant Property