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DUBAI PROPERTY PRICES, RENTS MAY NOT REBOUND UNTIL 2018

13/08/2016 0 10 views

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Dubai – “ASWAQ”
Residential property prices are reported to continue to decline during the first half of 2016, with values expected to reduce further until the end of 2017, as revealed in the latest Dubai residential research note by Phidar Advisory.
The new report said “soft demand” was behind the latest price drop rather than supply which has increased slowly over the past 30 months.
During Q2, apartment lease rates declined 2.2 percent, while sale prices declined 3.7 percent, pushing gross yields up to 7.9 percent, according to Phidar House Price Index. Lease rates for villas decreased 3.6 percent and sale prices declined 1.1 percent, which pushed yields down to 4.7 percent, it added.
Phidar Advisory’s managing director, Jesse Downs said: “The compression of villa yields is unsustainable and should slowly reverse in the coming year. Sale prices and rent declines for both villas and apartments will likely continue for the next 12 months, possibly up to 18 months.”
Downs commented that the strong US dollar is one of the biggest barriers to the recovery of Dubai real estate sector. She added, “Unfortunately, a strong dollar also is usually associated with a low oil price, signifying a double hit to the market.”
In 2015, foreign nationals were reported to have purchased over 80 percent of real estate investment in Dubai, of which 82 percent was purchased by foreign nationals outside of the GCC, most of which are from countries with floating exchange rates.
In Q2 2016, Phidar’s Dubai Real Estate Investment Demand Index remained flat, on the back of a strong, but stable, US dollar. Currency fluctuations have created inflationary shocks for foreign buyers of Dubai real estate since 2014.

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