Analytical forecasts of the house prices decline in Dubai have been exaggerated, and the timing of the real estate market return to the previous growth rates is much shorter than many expected. These results, summarizing six months market development figures, have been published by the leading real estate experts last week.
Last week in Dubai was marked by lull in all areas of the real estate market due to the Ramadan ending and the ensuing celebrations. However, at the end of the week major plans and directions for the further industry development began taking shape, new projects launches started to appear and, more importantly, analysts began making more detailed and more realistic forecasts for the further development of the Dubai real estate market.
Overall, the end of the first year half in Dubai feels like some kind of a major threshold has been overcame, and the phase of uncertainty, concerns and cliffhanging uneasiness is over. H1 report by analytical web-portal Bayut, presented at the end of last week, showed that prices in the real estate sales segment decreased by 5% - 10% in the first six months of the year, while rental rates did even show a quite serious increase.
Despite the fact that prices decline is still present now, Bayut experts believe that situation will change in 2016, and prices will start rising again. Dubai real estate market continues to adjust, to correct itself and to get rid of inflated prices and speculative extra charges load — the report says.
The popularity of such residential housing development as affordable housing and the need for its further wider implementation seems to have become the main subject for discussions in the field of Dubai real estate. This was confirmed by an Asteco report submitted last week. Such Dubai districts as IMPZ, Dubai Silicon Oasis, International City, and recently opened Queue Point and Sky Courts complex in Dubailand, shared surging demand for affordable property, as real estate investments income here is still at a rather high level, especially for the studio apartments.
Segmental nature of the Dubai real estate market development at the current stage as its main feature was also recently marked by many analysts. That is to say that market performance indexes vary greatly not only by location and price categories, but also by the type of the real estate. Thus, commercial, retail and office real estate markets showed much better performance in the first half of the year than residential real estate market in Dubai. However, within these market segments, too, pronounced prices volatility was marked. It all depends on the occupancy rates and the amount of new supply. In those Dubai areas, where almost all offices and retail space is already occupied, prices are rising, and, conversely, where new offices and shopping centers are handed over, prices are falling. So, while DIFC office rents increased on average by 11% in Q2, popular Business Bay district saw a decrease in rentals by 10% due to new office buildings construction.
“However, despite strong transaction levels, the increasingly competitive market environment, with a lot of new supply, means that the two per cent quarter-on-quarter decline is not going to be a temporary blip, with more pressure on owners to review their selling price, still to come,” John Stevens, Managing Director, Asteco said.
In general, experts advise real estate sellers to review their too high price tags for property, and not only in Dubai, but also in the Northern Emirates, where, according to analysts, a some kind of buyers "exodus" began, for the bigger part of buyers was lured by affordable housing back to Dubai being pushed away by inflated prices in Sharjah and other neighboring emirates.