The strong US dollar is weighing on Dubai’s luxury property market, with a 4.5% year-on-year decline in prices in the second quarter of 2015, according to Knight Frank.
There has been less activity from property investors from the Eurozone and Russia due to the weakening of currencies in those markets, the UK estate agency said on the release of its latest Prime Global Cities Index.
The UAE dirham is pegged to the dollar, which has strengthened in recent months, making property in Dubai more expensive to investors paying in some other currencies.
The Knight Frank index placed Dubai in 30th position out of the 35 countries ranked by the relative strength of their prime property markets.
“With the Dirham pegged to the US dollar, a strong currency is affecting Dubai’s luxury housing market leading to a 4.5% dip in prime prices in the year to June. Two key sources of demand, buyers from both the Eurozone and Russia are, as a result, less active,” the agency said.
Luxury property prices in the emirate were 4.5% lower at the end of the second quarter compared to the same time last year, and fell by 2.5% in the three months to the end of June, the report found.
Knight Frank’s global price index increased by 2.5% in the year to June 2015, but luxury property recorded flat growth in the first half of 2015. Vancouver, Miami and Sydney occupy the top three rankings in terms of annual price growth of prime residential property.
Singapore was the weakest-performing luxury residential market for the sixth consecutive quarter, with a 15% year-on-year decline in prices, Knight Frank said.