A turnaround in the Dubai property market is “imminent” due to a short supply of new units and the wider economic picture, a new report suggests.
The Reidin and Global Capital Partners report, A Tale in Three Markets, describes how there has historically been a low correlation between oil and equities, and real estate price moves.
“However, in the last 6 months the relationship has dramatically increased as concerns have amplified of the impact of oil prices on real estate activity,” the report noted.
“Similarly, there has been a moderately positive correlation between the equity and real estate market. This relationship has inverted in the last 6-12 month[s], as the equity market rebounded by more than 25% from its lows. Mean reversion suggests again that the relationship is expected to normalize, suggesting an imminent rise in real estate prices.”
The report also noted that a slower supply of property units will also have a positive impact on Dubai market prices.
“We opine as supply deliveries begin to slow compared to the previous years we can expect a price escalation in the near future,” it said.
Other analysts are split on the market outlook for Dubai property prices.
A report published in June by real estate consultancy ValuStrat found that rent and sale prices in Dubai’s residential property sector are showing strong signs of reaching a plateau.
But Cluttons said in April that Dubai property prices are set to decline further in 2016, after a 2.2% drop in residential values in the first quarter.