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Dubai’s real estate agents report decline in property prices

Emirates NBD survey, which shows 60 per cent of agents indicating a drop in average sold prices over the past three months, confirms recent analyst findings that city’s property market is weakening

Majority of real estate agents in Dubai stress that there is a slowdown in the property market with a drop in average sold prices over the past three months, according to new survey by Emirates NBD.

While only 13 per cent of the agents reported increase in sale prices, 60 per cent of them were of the opinion that the city’s real estate market was on downward journey, reveals The Dubai Real Estate Tracker survey sponsored by the bank and produced by Markit, financial information services provider.

Latest figures from buyer enquiries data shows that softer market conditions had resulted greater caution among buyers and weaker underlying investor sentiment with 54 per cent noting a decline over the period.

“The Dubai Real Estate Tracker survey is consistent with price data and shows a further slowing in the residential real estate sector over the summer months. While the slowdown is partly seasonal, other factors including concerns about the economic outlook and US dollar strength have weighed on demand,” says Khatija Haque, Head of MENA Research at Emirates NBD.

The survey essentially confirms recent reports by leading analysts and consulting firms that property prices in Dubai are witnessing a sharp decline as city’s real estate continues to soften.

Consultancy firm CBRE in its report released ahead of Cityscape Global, the real estate mega exhibition being held in Dubai from September 8 to 10, shows that property sales in Q3 2015 were two per cent lower than the sales during the previous quarter.

Meanwhile, average house prices fell nearly six per cent to reach AED31.74 billion, down from AED39.56bn a year earlier.

Faisal Durrani, the head of research at property consultancy Cluttons, told AMEinfo that house prices in Dubai’s residential market are 3.1 per cent lower now from the same period a year ago and 21 per cent below the Q3 2008 market peak.

However, the Emirates NBD study pointed to a rebound in confidence regarding the outlook for the next 12 months, with 45 per cent of agents expecting a rise in average property values outstripping 30 per cent forecasting a reduction.

Rents in the city’s residential segment remained stable on average over the three months to August, with real estate agents reporting both a rise in newly agreed rentals and increasing levels of new enquiries, according to the survey.

“However, the lettings market remains robust both in terms of the volume and price, suggesting that population dynamics are supportive of the real estate sector,” adds Khatija.

Hasham Al Qassim, CEO of Wasl Asset Management Group said that the current downturn in the market could be better characterised as a “stabilisation” rather than a “softening”, adding that this was the right time for a correction to happen because both the real estate sector and the emirate’s economy had witnessed rapid growth between mid-2013 and mid 2015.