Dubai real estate prices decline period coming to an end
Despite the pessimistic forecasts for lowering activity in the Dubai housing market in 2015, official statistics suggests the opposite. According to the Dubai Land Department annual report, property buyers from around the world invested USD 31.86 billion in Dubai’s real estate during 2015. More than 60,000 transactions were conducted in the emirate within a year, which is 8% more than the previous year.
Dubai property buyers were interested mostly in central areas with good infrastructure such as Business Bay and Dubai Marina, where the maximum number of ready property sales transactions was registered. Experts also noted the growing share of mortgage sales: property buyers are more willing to take loans and developers offer attractive payment schemes for the off-plan real estate.
Business Bay has also outperformed other Dubai locations by the number of units supplied last year in the office real estate segment (26% of the total units number), while office property sector itself was far ahead of all other industry sectors by its growth indicators in 2015. According to JLL, the total office space in Dubai increased last year by 700,000 square meters reaching a total of 8.3 million square meters. Other developing Dubai business areas like Dubai Design District, TECOM and Logistics City also saw an upsurge of new offices supply last year.
Meanwhile, central Dubai areas are changing their shape and look being transformed by new large-scale urban infrastructure projects. It is expected that Dubai Canal, which is reported to reach 61% completion, not only generates great interest in the real estate projects on its banks, but also contributes to the development of neighboring areas.
The Dubai Canal project is not just about the Canal alone — while a new waterway will connect Business Bay directly to the Gulf, a number of related projects is about to welcome new residents and guests. For example, the Gate Towers project will house 1,140 apartments and 200 shops and other facilities on the territory of 4.7 million square meters. About 167,000 Dubai residents already live near the Dubai Canal, and new projects will provide housing for another 22,000 people.
The influx of new residential and commercial units to the Dubai real estate market, however, will not lead to a decline in demand experts from different agencies believe. According to Phidar Advisory, “The five-year supply pipeline grows at 3.6 per cent compound annual growth rate (CAGR) whereas the demand grows at a robust 6.5 per cent CAGR, largely due to jobs created by the development and running of the Expo 2020 project”. ValuStrat and Reidin also believe that a period of Dubai real estate prices declining is coming to an end now. House prices in Dubai are unlikely to grow in the coming months, however, likely to remain at the same level.