Dubai property prices will continue to fall for the rest of the year, but the rate of decline will be slow, according to a new report by Deloitte.
In an update to its Middle East Real Estate Predictions report published in January, the Big Four accountancy firm said that residential prices continued to drop by 3.8 per cent in the year to June, with the market continuing to be indirectly affected by lower oil prices.
It said the proportion of people surveyed in Dubai who had been expecting an increase in disposable income had dropped to 30.2 per cent this year, down from 52.9 per cent in 2015.
It also said that its prediction on the number of units being delivered remains on track.
In January, it predicted just 10,000 units would come to market in 2016 compared with market stakeholders’ forecasts of 40,000. Its prediction remains on track, the firm said, with 5,000 units delivered in the first six months.
The firm said that both residential and hospitality markets rebalanced towards “a new normal” in the first six months of 2016, with the residential sector focusing more on affordable projects and serviced apartments remaining in strong demand in the hospitality sector.
Data from the Dubai Department of Tourism and Commerce Marketing found that serviced apartments experienced the highest occupancy level of any hospitality category at 83 per cent.
“Average hotel occupancy in Dubai in the first six months of 2016 was 77 per cent, slightly ahead of our forecasts,” said Robin Williamson, a managing director for Deloitte Corporate Finance Middle East.
However, he added that operators had been forced to discount to maintain occupancy, with average daily rates declining in the first six months of the year.
“We anticipate that this trend is set to continue in the second half of 2016,” he added.
Meanwhile, the office market continued to be affected by trends in local sub-markets.
Areas such as Business Bay, where new stock coming on to the market, were subject to rental price declines, but core locations such as DIFC continued to perform well, with waiting lists for space in many buildings and the under-construction Gate Village 11 building already 100 per cent pre-let.
“We anticipate that these trends are likely to continue in H2 2016, with further completions in secondary locations giving tenants greater negotiating power,” Mr Williamson said.
“In free zones, we anticipate that factors such as high-quality infrastructure and more accessible public amenity provision will continue to drive demand from corporate occupiers.”
New figures from data provider Reidin for August found that there had been a marginal growth of 0.14 per cent for Dubai properties for sale in August.
On a rolling three-month basis, sale prices have remained flat and rents have dropped by just 1 per cent.
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