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Ramadan and the summer months are traditionally quiet months in Dubai. However, data from the Dubai Land Department revealed that there was a 50% decline in sales activity over the first five months compared to the same period in 2015 as more buyers adopt a ‘wait and see’ attitude.
Over the first five months of 2014 there were 11,900 sales transactions of apartments and villas registered with the Land Department, with a combined value of around AED19 billion. Sales over the same period this year fell to around 5,800 (with a total value of just over AED10 billion).
This represents a fall of around 54% in the number of sales and 4% in the value of total transactions.
JLL has identified four major reasons for this decline. Two of these can be classified as market factors and two due to regulatory changes. The most important change in terms of market factors is a major shift in buyer sentiment as prices have stabilised. JLL expects prices to decline further over the rest of the year and this has caused many investors to adopt a wait-and-see approach, thereby reducing the level of sales in the marketplace.
The second market related factor is the significant strengthening of the dollar against many overseas currencies that occurred over the past year. With expatriates accounting for over 75% of all residential sales in 2014, the stronger dollar has effectively increased the sale price of Dubai real estate for many overseas investors.
