Dubai property correction expected to continue into 2016

Dubai house prices fell in the the two months to the end of August as the city’s property correction continued.

According to new figures from broker CBRE published this morning, average house prices in Dubai dropped by another 2 per cent during the period, equating to a 6 per cent fall compared with the same period a year earlier.

The figures come on the eve of Dubai’s annual Cityscape Global property exhibition and follow in the wake of statistics published by rival broker Knight Frank last week showing that the Dubai residential property market was one of the worst performing in the world in the second quarter of the year with greater price slumps than Greece, China and Ukraine.

At the start of 2015 JLL predicted that house prices would fall by around 10 per cent during the year.

“I think we’re pretty much on target to reach that sort of level [a 10 per cent fall] over the year,” said Matthew Green, head of research at CBRE’s Dubai office.

“Really what we’re seeing is that recently implemented measures such as mortgage caps having the desired effect after the market raced ahead of itself for the previous two years,” he added. “Now we’re expecting the slowdown to continue into 2016 as more stock comes online and the market faces difficult economic headwinds from around the world.”

CBRE added that housing rents in Dubai on average remained stable during the period making yields potentially more attractive to investors.

“It’s a very fragmented market at the moment,” Mr Green added. “Although prices are falling, we’re also seeing huge currency fluctuations. So for anyone who bought in Euros in Dubai and expects to see further price falls, it would still be possible to sell and still make a tidy profit simply due to the currency movements. This is again creating opportunities for other investors.”

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