Dubai Real Estate Market Analysis 2016

Tuesday, August 2, 2016

Dubai Real Estate Market Analysis 2016

Are Dubai properties set for another price fall this year?

Experts seem to of think that amidst declining oil prices and the strong US dollar, which is making Dubai real estate more expensive for international investors, prices may dip further this year. Residential Dubai properties  saw a price decline in 2015 which can be attributed to a number of factors, including an exceptional double-digit growth seen in 2013 and 2014, a significant dip in global oil prices which has negatively influenced sentiment and demand from the Middle East North Africa region and the strength of the US Dollar (to which the UAE Dirham is pegged) against currencies from key global markets such as India, the UK and Russia. This inturn has led to a decline in the investor purchase power.

Despite  showing declines in some performance metrics and a slowdown in the Dubai real estate market, Dubai properties continue to provide secure and viable investment opportunities for foreign investors looking for long-term wealth preservation and attractive returns. This makes Dubai an ideal option amongst global cities when considering a long term investment, and a transition to a more mature market.

Recent data predicts that market fundamentals for Dubai properties are likely to remain positive this year, including infrastructure investment and connectivity. Last year saw a significant number of project launches contributing to a strong residential pipeline for the Emirates. Hence, this year seems to be cut out for project delivery.

Moreover, despite the decline in average Dubai real estate residential sales prices last year, price growth over the last four years reflects a Compound Annual Growth Rate (CAGR) of over 10 percent, higher than leading global cities such as London and Sydney.

On the other hand, hospitality market fundamentals in Dubai remained strong in 2015. Dubai International Airport retained its position as the world's busiest airport for international passenger traffic. The tourism industry is very important to Dubai’s economy, given that the city holds the position for the highest overnight visitor arrival expenditure globally.

All in all, a relatively moderate decrease in Dubai real estate prices should not be viewed negatively, as Dubai remains one of the best performing property and hospitality markets worldwide.

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