Dubai to face further decline in property prices

Housing prices will fall again, but it is only an internal market correction: Standards & Poor's.

According to analysts from different agencies, in particular, of Standards & Poor's and JLL, it is likely that housing prices in Dubai will continue to decline in the second half of the year, which will attract more buyers in the emirate.

However, analysts have no worries about the reasons of the further prices reduction: in their opinion, if prices decline, it is only the adjustment to inflation, and not because of market crisis, although some small developers may still be pushed out of the market due to the decline in housing prices.

“We believe companies have the possibility to adjust the pricing of their products if the supply volume remains so high and there is pressure on the sales price,” said Franck Delage, director of corporate ratings for Europe, the Middle East and Africa at Standards & Poor’s.

The decline in property prices in Dubai began with the fourth quarter of last year, when the fluctuations in the oil market influenced investors’ behavior. In such areas of Dubai like Al Barari, Dubai Marina, Downtown Dubai and Arabian Ranches prices decreased by almost 20% during that period, and the cost of housing in areas such as Emirates Living (The Springs, The Lakes, The Meadows) and Jumeirah Lake Towers declined by 10-15% during the same period. The most significant decline in prices was recorded in Downtown Dubai, where property was initially overpriced the most.

As for the future outlook, property priced decline in Dubai, according to JLL and Standard & Poors, can be expected to stay in the range of 10% to the end of the year.

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