14 February 2016· KPMG's "Building Confidence" report on Dubai's residential real estate market identifies internal and external factors that are currently affecting the market
· KPMG outlines five key trends that will impact residential real estate in 2016 and beyond
· Report suggests improving maturity in the Dubai real estate market since 2008, helped by significant regulatory changes
Dubai: KPMG's "Building Confidence" report - a review of Dubai's residential real estate market predicts that while 2016 may be a challenging year for Dubai's residential real estate in the short term due to a number of internal and external factors, the market should see an upturn in 2017.
The statistics from Dubai Land Department report a decline in the number of residential units sold between January 2014 and November 2015. While certain areas have been more impacted than others in terms of declining prices for residential real estate, the overall magnitude of the decline has been tempered. KPMG suggests that this is a result of vastly improved regulations within Dubai's real estate sector.Affordable housing areas have incurred lower declines and, in some cases, even maintained value or rental yield.
Sidharth Mehta, Partner and Head of Building, Construction and Real Estate with KPMG Lower Gulf, commented: "While oil prices remain well below the long term average, which is clearly having an effect on market confidence, Dubai's improved regulatory environment, broader investor profile, and increased maturity are all indicators that its real estate market should eventually self-correct."
Kaushal Dayal, Director with KPMG's Management Consulting practice, added: "After 2008, a number of measures were put into place to regulate the Dubai real estate market. The Real Estate Regulatory Agency (RERA), the introduction of mortgage caps and the establishment of the Al Etihad Credit Bureau have mitigated a lot of uncertainty in the market - even in the face of economic pressure from falling oil prices, currency fluctuations and geo-political uncertainty."
The report indicates five key trends that will drive the Dubai residential real estate market in 2016 and beyond:
(1) Liquidity is likely to become increasingly important as markets continue to tighten.
(2) A second important trend relates to the oil price, which seems unlikely to recover in the short term.
(3) As supply and demand are not currently balanced, certain areas and segments are significantly more attractive than others - with a premium for quality.
(4) There is also going to be a drive towards affordable housing, with increasing amounts of housing coming onto the market at prices that both compete with the rental market but also - and probably more importantly - appeal to a much wider demographic.
(5) And, finally, Expo 2020 is likely to have both a direct and indirect impact on the real estate market - and is increasingly on the horizon for both the private and the public sector.
Sidharth Mehta concludes: "When preparation for Expo 2020 picks up, we expect to see a significant amount of job creation and an increase in demand for residential real estate. Although 2016 could be challenging in the short term, with effective regulations in place and the infrastructure investment that is committed as part of Expo 2020, we should see an upturn in the real estate industry in 2017."
KPMG is a global network of professional firms providing audit, tax and advisory services. We operate in 155 countries and have more than 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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© Press Release 2016