The real estate market in Dubai has been buzzing with activity. Almost every month, a high-profile residential project is being launched.
However, there is a general perception among investors that real estate prices in the emirate are going down, amid claims of real estate consultants that the market is witnessing a slowdown.
Figures from JLL show that average apartment prices fell two per cent compared with the previous quarter and villa prices fell one per cent during the first three months of 2015.
Financial advisory, Deloitte, in its Real Estate Predictions report for Dubai suggests that the market is maturing and strengthening.
“Dubai’s property market has experienced another year of change, with a levelling off in capital growth, in certain areas, towards the end of the calendar year. Whilst possibly not welcomed by traders and speculators, this new characteristic suggests a market that is in fact maturing and arguably strengthening,” says Robin Williamson, managing director, Deloitte Corporate Finance Limited.
“Provided growth continues at sustainable and realistic levels over the medium term, this is likely to improve end-user and investor confidence, which will have obvious benefits to the Dubai property market as a whole,” he adds.
Let’s take a look at the key predictions from Deloitte on Dubai’s residential market performance for 2015:
- Residential transactions have slowed to a more sustainable level, reflecting the longer-term trend and this level of transactions will continue for the remainder of the year.
- Residential sales prices in Dubai will continue to soften by one per cent to five per cent in H1 2015, before stabilizing in the second half of the year.
- Affordability, for both nationals and expatriates, will gain more attention in 2015 and areas such as International City and Sports City, where more amenities are planned, will continue to experience strong demand.
- Overseas investors will continue to drive demand but transaction volumes may be impacted by increasing stability in Egypt and the financial and political issues affecting Russia.
Deloitte’s predictions on Dubai’s office market performance for 2015:
- Increased polarization between office areas in Dubai is predicted during 2015, as well as a greater divergence within districts, as a result of planned supply increases and competition to attract occupiers.
- A number of additional schemes will be announced during 2015 in prime locations, such as DIFC, where relatively strong demand was experienced in 2014.
- Schemes with good access to public transport, a competitive car parking ratio, high quality specification and a range of amenities will achieve the highest occupancies and rates.
- Pre-lets for office space will be more prevalent in 2015, following a period of virtually no pre-let transactions since 2009.
- Office schemes with reputable developers are likely to attract the most interest, as occupiers demand assurance of quality and delivery. For occupiers who are prepared to commit to pre-let agreements, there will be attractive deals available as developers compete to secure tenants with covenant strength.