Dubai market sees slowdown
House prices in Dubai fell slightly during the first three months of the year as thousands of new homes came on stream.
Apartment rentals witnessed decline in Al Nahda, Al Barsha, International Media Production Zone (IMPZ), MotorCity and Liwan; however, Jumeirah Lakes Towers, Discovery Gardens and Karama saw the greatest drops. Figures released by the property broker CBRE reveal that average house prices in the emirate fell 2% compared with the previous quarter after 16,000 new homes were completed during 2014. The news is the first confirmation that house prices in the city are set to fall significantly this year as new homes complete at a time when oil prices have slumped and the government’s plans to slow the market come into effect.
Landlords in Dubai are likely to offer rent-free periods as new housing supply comes in, according to a global real estate consultancy. “The leasing market which has remained stable over the past three quarters is expected to witness increased landlord incentives in the form of rent-free period and other allowances, while rental declines are also likely in some areas,” said Mat Green, Head of Research & Consultancy UAE, CBRE Middle East, in the first quarter ‘Dubai Property Report’.
While rents may be coming down, investor attention in Dubai has not slowed down. In fact, potential investors from Iran have also started looking to Dubai as the place to invest after western powers reached a deal that should pave the way for an end to the crippling sanctions on the country. “In the last 48 hours, we have been taking calls from Iranian prospects who have sounded out the possibility on exposures in locations, such as the Downtown and for mid-tier properties elsewhere in Dubai’s freehold areas,” Juwaad Beg, CEO of Al Madina Al Raeda Real Estate told Gulf News.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. It's clear that the market is slowing down, as predicted. Asteco, a real estate consultancy, said earlier that rents will not only soften in 2015, but a more significant drop in rental rates could be on the cards from 2016 onwards as a large number of projects announced in 2013/14 (an estimated 12,000 to 14,000 villa units) are completed.