Dubai’s property prices may continue to post declines next year, but the outlook for the market is no longer as bleak as it was earlier this year.

Industry analysts interviewed by Zawya have agreed that the real estate sector has not yet reached their bottom levels, as more residential and commercial units are still coming in and putting pressure on prices.

What will significantly help the market, however, is the upcoming Expo 2020 and continuous push by the government to introduce and implement more initiatives that can boost investor confidence.

“We’re still in a correction phase and we will continue in that phase before things stabilise. [As to when it will happen] no one has the crystal ball to predict that,” said Lynette Abad, director of research and data at Property Finder.

Abad said that they are starting to see investor confidence coming back thanks to the positive regulations rolled out by the government, but until the supply and demand even out, the downward movement in the market will continue.

“The Expo 2020 is going to bring a fabricated boost to the market, but it’s going to be temporary because more supply is still coming in. [But one thing is certain]: I don’t see more doom coming,” Abad said.

According to Property Finder’s research, a total of 32,822 new apartments and villas were completed in Dubai between January and November this year, and an additional 13,216 properties are expected to be added to the market between December and the end of the first quarter of 2020.

Separate research by Property Monitor showed that property prices in Dubai declined to a seven-year low, while transaction volumes approached record high levels.

When asked if the prices have already hit the floor, Zhann Jochinke, chief operating officer of Property Monitor, hinted that more declines are still expected to happen. He noted that the price decline trend is still showing “signs of accelerating” compared to previous years.

“When a market cycle is close to bottoming out, we would expect the pace of the decline to be instead slowing,” Jochinke told Zawya.

He said another factor that is still an unclear indicator is vacancy rates. While landlords have lowered their rents, the supply of rental properties “hasn’t displayed much change.” 

This could be because the pace of the new inventory coming onto to the rental market is a “relative equilibrium with the pace at which the units are being rented.”

“However, the increasing absorption of units - November 2019 was one of the strongest months on record for transactions - suggests that we might be approaching a bottom,” Jochinke said.

“Bottoming out itself could take anywhere between a few months to a few quarters, especially considering the additional supply expected to hit the market over 2020 and beyond,” he added.

The government has announced several initiatives to help stimulate the economy and attract investors to the emirate.

A special committee was launched to balance supply and demand in Dubai’s property market. 

The Dubai Land Department also announced the launch of the Real Estate Investment Opportunities (REIOs) initiative to strengthen the emirate’s investment position and competitiveness and attract new investments in the real estate sector. 

The UAE cabinet announced in July that a total of 122 economic activities across 13 sectors in the UAE would be eligible for up to 100 percent foreign ownership, such as renewable energy, space, agriculture and manufacturing.

(Writing by Cleofe Maceda; editing by Seban Scaria)

(cleofe.maceda@refinitiv.com)

© ZAWYA 2019