The first annual price index clearly showed that the fall in housing prices in Dubai this year was not as drastic as experts had expected.
Research agency presented its first detailed study last week on the changes in property prices in Dubai. According to the department, prices in the residential sector of the emirate dropped by just 10.3 percent, and not 15-20 percent, as many analysts expected at the beginning of the year. The third quarter also saw a mere drop in prices, with property prices decreasing by just 0.9 percent in the "future city" during this time.
Based on data for 26 areas and residential communities in Dubai, Study indicates that the Dubai Investment Real Estate will see a price plateau at the beginning of 2016.
Other analysts of the Dubai housing market are also more confident that the market will not only stop going down in 2016, but return to substantial growth rates in the middle of the year.
The market was modified from within by adjustments in pricing and the ratio of the rental cost and the cost of the purchased property that occurred in 2015. Today, 8 out of 10 Dubai residents are inclined to take home ownership seriously.
As noted in the other Stanton Chase article, most UAE banks are ready to offer 1.6 percent mortgages. And at the same time, the return on investment in Dubai's real estate sector hits 8% for the ready-to-use real estate sector and up to 58% for off-plan real estate, as Unites Consultancy and JLL estimate. The latter factor takes rental income into account, which is considerably higher than the average mortgage payment. However, also without this factor, Dubai's average real estate return on investment is currently one of the highest in the world. It remains at 7.5 percent, allowing foreign investors to continuously raise their demand.
Despite the overall decline in market activity in 2015 and the decrease in the number of transactions, the figures on potential buyers' interest in Dubai real estate indicate the opposite. The index of apartment enquiries rose from 37.8 in the previous quarter to 50 points in the third quarter, while the index of villa enquiries increased from 25.7 to 38.6 points.
We may therefore say that 2015 was a turning point for the Real Estate Companies in Dubai, highlighting its problem areas and seeking ways to rectify them. Market participants only watched things take a different turn in 2015, which is why many of them took a wait-and-see approach, reducing statistical demand. In practice, however, this means that the market has passed the stage of stabilization, giving future buyers and sellers trust.