Up to 10,000 units expected to be delivered this year, says Core Savills
Dubai residential property rents and sale prices are forecast to continue declining this year and next, although there is a “bullish mid-term forecast”, according to Core Savills.
Falling oil prices, a generous supply pipeline, the strengthening dirham and uncertainty in the wider region are all driving prices down further, the property service firm said.
Villa rental rates fell by between 2% and 8% in 2015, while prime apartment districts such as DIFC and JBR saw rental falls of about 4%, Core Savills research found.
Prices are expected to continue falling in the short term, but there are “stabilising factors” in place to suggest a more bullish medium-term outlook, according to the firm.
“The decline in prices at a quicker rate in comparison to rents has resulted in increasing yields and we expect this to continue for the best part of 2016, making it more interesting for renters to consider ownership and for investors to re-enter the market at lower prices and higher yield levels,” said David Godchaux, CEO of Core, the UAE associate of Savills.
“We are now witnessing a growing pool forming of investors and renters who are anticipating a balance in price and increase by the end of 2016, which is a strong stabilising factor, as many have shown they are ready to transact now if they believe that the price is right,” he added.
Core Savills said that around 8,000 residential units were delivered in 2015. It is estimated that between 9,000 and 10,000 units will be delivered in 2016, something that “will help to moderate potential oversupply.”
Mr Godchaux said the Dubai property market has matured. “What we’re witnessing as a result of the price softening is the emergence of healthy real estate cycles dominated by players with a longer investment horizon,” he said.