Dubai property to recover… But not this year.
As summer comes to a close the time appears right to reflect on what has happened over the past few months as well as to try to understand what is likely to happen over the next few months.
Personally I do not believe in trying to quantify percentage changes in prices as there are a plethora of reports available which cannot seem to agree on the direction of prices nor a similar range of changes in price.
There is no doubt that prices have declined over this year and this is also reflected in the lower number of transactions, as is typical in any real estate market the brunt of the declines is seen in tertiary locations whereas more prime locations are more robust to changes in demand and supply.
Overall business sentiment is not as positive as it was a year ago and I believe this is mainly a result of the ongoing low oil prices which is not only affecting governments and their spending but also consumers who appear to have less disposable income which is all creating inertia within Dubai.
The recent announcement of the bankruptcy law in the UAE should be viewed as a positive step towards attracting investment as well as providing time for businesses to recover from expected events. The details and the mechanisms as to how this will work in reality will be watched carefully.
Looking forward there are a number of positives I believe will begin to have an effect on the market:
– Firstly the EXPO 2020 is getting closer and it is an industry wide held belief that this will ultimately lead to price appreciation exactly when and by how much is pure speculation, however on this point I do believe this effect will materialise towards the second half of 2017.
– Secondly, there is a consensus on oil production to stablise or “prop up” the oil price which should positively impact the entire region both from a business perspective and consequently real estate.
– Dubai and the UAE continue to invest extensively in economic projects and this is likely to increase over 2017.
Overall, it is a challenging time for Dubai and it is adaptability to the new landscape that will be a key to success.
*The above comments are based on the fact that we have conducted extensive valuations recently.