The 1st quarter of 2015 has put the Dubai real estate market through a testing experience. The market has been hit with decreasing numbers of transactions, and diminishing price levels. However, for the first time in its short life cycle the market has fought back with signs of stability and maturity.
This level of stability is still yet to translate into investor confidence, but as prices in the market continue to slide, additional demand continues to unlock as residents now see purchasing primary homes as a true alternative to paying annual rents – which are decreasing at a slower rate than sales prices.
The key trend or investor stance is “let’s wait and see what happens”. Many investors believe they are waiting until the market bottoms out. Unfortunately no one knows when the market has bottomed out until after it has already happened and values start increasing.
Off plan launches continue to defy market conditions, as projects continue to sell out early into their launches as customers seek the opportunity to attain short term capital gains – something that does not currently exist in the ready property market. Property Developers have been quick to realize this and have been adding wood to the fire by offering attractive payment plans – attainable to the majority.
Q1 AVERAGE APARTMENT PRICES
Q1 AVERAGE VILLA PRICES
The Dubai Market in figures
- 2014 number of transactions decreased by 23% Y-O-Y
- 2014 value of transactions decreased by 14% Y-O-Y
- Prime residential prices declined for 3 consecutive quarters from 2014 Q3
- Prime residential real estate prices expected to decrease by 5% in 2015
- Prime residential supply in 2015 will equate to 2% of existing total market
- Dubai still rates 19 / 20 for most expensive real estate per sqft vs competitive markets
- Plunging of oil prices having limited effect on the real estate sector
Dubai Market Summary
- Dubai investment outlook stretches to take into account longer term views. The ability to achieve short term gains is diminishing
- Quarter on quarter average price decreases 3% and 5% for apartments and villas, respectively
- Market generally behaving as expected, with growing maturity and stability as the positive result
- Off-plan launches continue to be successful.
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