Dubai is now seeing a house price correction, because things had reached a point where living and working here was becoming too costly. After the 2008 crash, Dubai Investment Real Estate has come a long way.
In 2013, with rents creeping up in prime areas, property prices shot up once again. However, the market is expected to see some dramatic changes this year. The market has been showing signs of stabilization since the end of last year. Today, most real estate analysts are forecasting that rents will decline by 5-10% this year.
JLL Mena's real estate consultancy is swift to notice that this period will be different from 2008, however, because developers are certainly "being smarter second time around." JLL's forecast is close to the property group's 2015 projections, which said that this year's arrival of new units on the market could have a deflationary effect on sales and rental rates.
Prices soared too fast in the two years to June 2014, with house prices rising by 56 percent. Dubai is now seeing a house price correction, because things had reached a point where living and working here was becoming too costly. According to a top ratings agency, in addition to the UAE government's attempts to correct market prices through a series of regulatory actions, the real estate sector would also be impacted by declining oil prices. Standard & Poor expects to suffer from increased supply and declining sentiment in the real estate market, exacerbated by the tumbling oil price. This year, the residential sector is slated to absorb 25,000 new units.
This year would certainly see improvements in the Real Estate Companies in Dubai. The real estate market is stabilizing and the price of houses is likely to fall. It is clear, however, that these modifications will not be seen across the board as primary areas will not be as affected as other regions. We have hit the height of residential prices in Dubai, and that is a positive thing. We are now at the top of the cycle and we expect that this year will decrease prices and rents, head of research at the Dubai office of JLL.