The UAE’s real estate market may experience a turnaround in 2018 after years of falling property prices, according to data collected by Propertyfinder Group.
The latest edition of Propertyfinder’s ‘trends’ report notes that the sale prices of apartments have been falling with low, single digit declines across most areas of Dubai. Similarly, villa prices experienced significant declines, particularly in Meadows (9.3 percent), Dubai Land (8.2 percent), Furjan (8.1 percent) and Jumeirah Islands (7.1 percent).
“Popular sentiment is that prices are at, or very close to, the bottom of the cycle and will increase in the lead-up to Expo 2020,” said Lukman Hajje, Propertyfinder Group chief commercial officer.
“There will also be an increase in product offerings in affordable emerging communities in the sub-one million AED, sub-one thousand AED per square foot segments, which were historically underserved during Dubai’s earlier construction booms.”
Hajje added that the oil price rally of the last four weeks – which has reached a three-year high – means here may be more reason to be bullish on the UAE’s real estate market.
Additionally, Propertyfinder noted that population growth outpaced new supply by two to one in Dubai, according to real estate portal Reidin. According to Propertyfinder, 2018 will likely follow a similar trajectory, with strengthening demand potentially offsetting the rise in supply.
Property investments were also found to still command healthy yields of six to eight percent, suggesting that Dubai (and Abu Dhabi) remain attractive options for investors-turned-landlords.
Lastly, Propertyfinder noted that homeowners have largely avoided the brunt of changes in the UAE’s tax policy, and still do not have to pay taxes on capital gains, property appreciation, salaries or rental yields in the UAE.
“With real estate prices declining significantly in the last 12 to 18 months, and with the lowest price per square foot across 10 major international cities, Gulf Sotheby’s is predicting that 2018 will see an uptick in the market, especially for the ready segment,” Gulf Sotheby’s managing partner Kalpesh Sampat wrote in the Propertyfinder trends report.
"The lower pricing has mainly been a result of several off-plan launches in the affordable segment," he added. "This strategy cannot be sustained over a long timeline, as it adversely impacts the bottom line - that's why I am convinced pricing will revert back to more normalised levels in 2018."
