Home buyers will continue to see great options in Dubai’s real estate market, as there will be further price slowdown in the residential space this year, according to the latest analysis.
Due to prevailing negative sentiment and supply pressures, more capital value declines will be experienced over the next 12 to 18 months before the market will start to stabilize, said Haider Tuaima, head of real estate research at ValuStrat.
“There is a high likelihood of capital values to plateau during 2021, after which it would commence a gradual positive growth,” Tuaima told Zawya.
The latest ValuStrat Price Index (VPI) for December 2019 stood at 75.3 points, falling 0.8 percent since November and 10.4 percent annually.
The average loss in capital values per month slowed marginally when compared to the average -1 percent in 2018, but it doesn’t mean the prices have already hit bottom levels.
“We could see a further deceleration in the coming 12 to 18 months,” said Tuaima.
The continued decline in capital values is driven by market sentiment, in addition to demand/ supply fundamentals. According to Tuaima, the city is expected to face a glut of residential supply in the coming months and this is causing fear of further declines.
“So far, thanks to delays in some project handovers, and limited off-plan launches, this has not been the case. Having said that, some locations, particularly high-end properties in Emirates Hills and Palm Jumeirah, have proven to be more resilient towards the downward trend than the rest of the city,” added Tuaima.
Tuaima, however, noted that there is still a growing number of buyers snapping up properties in the emirate, with property sales in December surpassing November data.
Sales generated from cash buyers grew 35 percent in 2019 compared to 2018. The strongest buying activity happened in the fourth quarter when off-plan cash sales increased by 68.3 percent compared to the same period in 2018.
“Buyer demand is no doubt growing,” added Tuaima.
Industry analysts earlier interviewed by Zawya had said that the real estate sector has not yet reached their bottom levels, as more residential and commercial units are coming in and putting pressure on prices.
The staging of the World Expo 2020 will certainly boost the market, but the positive impact will only be temporary. What is certain, however, is that the real estate sector will not see any more doom coming, according to Lynette Abad, director of research and data at Property Finder.
If estimates were accurate, more than 44,000 new homes would have been added to Dubai’s residential supply in the last one year.
During the first nine months of 2019, more than 32,000 villas and apartments in the freehold and non-freehold developments were completed, according to Property Finder. Another 13,216 units were expected to be completed towards the end of 2019. (Writing by Cleofe Maceda; editing by Mily Chakrabarty)
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