Property market in Dubai hit by over supply bringing down prices
Property prices in Dubai fell significantly in 2018 with slowing global growth and over supply affecting the residential housing markets, according to a new analysis report.
Prices have slumped in Downtown Dubai, down by 16%, prices in the world’s tallest building Burj Khalifa down 12% and on the Palm Jumeirah and Dubai Marine down by 5% to 7%, according to the report from international real estate firm Savills.
The data also shows that two bedroom apartment prices in Business Bay have fallen by 18%, while three bedroom apartments in The Greens fell by 11%, as did one bedroom apartments in Downtown Dubai.
Falls in the villa and townhouse market were led by a decline of 9% in for four bedroom villas in Al Furjan and three bedroom townhouses in Springs, while prices fell by 8% for three bedroom townhouses in Mira. The price of four bedroom villas in Arabian Ranches also fell by 8%.
It says that the residential real estate market was firmly in a correction phase during 2018 in Dubai, impacted by a slowdown in global trade and financial markets affecting demand for homes in the emirate.
Sales are also down significantly, with a fall of around 22% year on year with the research suggesting that buyers have adopted a wait and see approach. Most sales, some 58%, were for off plan apartments last year, down from 67% in 2017.
However, demand for ready to move into properties increased and Savills says this was due to a spike in project completions over the last 12 months. Developers offered generous post-handover payment plans and other incentives such as partial or full waiver of associated fees to spur interest across completed properties.
The vast majority of sales were apartments, accounting for 87% of the total transactions in 2018 with studio and one bedroom apartments the most popular, making up 70% of sales. In the villa market there and four bedroom homes were the most popular.
Steven Morgan, chief executive officer of Savills Middle East, explained that the Government has made a number of bold, innovative changes to stimulate the growth of the economy and there is hope that the market will pick up.
‘There is no doubt that 2018 was a challenging year for the global economy, so it was perhaps inevitable that the UAE would feel a certain ripple effect of pressures beyond its own borders,’ he said.
‘The real estate industry in the UAE is very much a place of opportunity for the committed investor. The various proactive measures adopted by the Government in 2018 will have a positive impact on housing demand and help the maturing real estate market,’ he explained.
‘Along with mainstream investors comprising Emiratis, Indians, Pakistanis and British, we anticipate demand from other nationalities such as Chinese, Americans and others to increase on the back of Dubai Land Department’s investor outreach programme,’ he added.