Online classifieds site dubizzle has added its voice to the weight of opinion suggesting Dubai’s property market is showing signs of bottoming out.
The company’s second-quarter property report showed that prices per square foot in Dubai were generally flat quarter-on-quarter, although there were variations within individual areas.
Prices in Business Bay rose by 3 per cent to Dh1,519 per sq ft, but fell by 3 per cent in Dubai Marina to Dh1,625 per sq ft, by 2 per cent at Palm Jumeirah to Dh1,943 per sq ft and by 1 per cent in Jumeirah Lakes Towers to Dh1,219 per sq ft.
Rents were generally 2 per cent lower across the market.
“Sale prices [in Dubai] have decreased since mid-2014,” said Ann Boothello, the senior product marketing manager for property at dubizzle.
“The residential property sale price cycle is almost at a close as we have not witnessed any major shifts in pricing from Q1 to Q2 2016. Rental prices are now in the phase of bottoming out – tenants still have the upper hand with more negotiating power. Landlords are marketing their properties at more competitive prices and agreeing to three or four cheques to avoid having vacant properties.”
In Abu Dhabi, however, both sale prices and rentals are showing signs of decline as the market continues to be hit by a lack of confidence following oil price declines and layoffs. Sales prices declined 3 per cent on average.
Sale prices have dropped by 11 per cent on the first quarter at City of Lights in Reem Island to Dh1,200 per sq ft as more stock is handed over, and at Saadiyat Island prices fell by 7 per cent to Dh1,512 per sq ft. Rents for the biggest three-bed apartments fell by 15 per cent to Dh220,000 per year.
Dubizzle said the cost of living in the capital had increased, with the 3 per cent municipality tax being introduced at a time when salaries were declining in industries that are cutting costs, such as oil and gas and hospitality. It predicted further falls in rents in the third quarter.
“Families in Abu Dhabi will consider downsizing as they are having to budget better and relocate to smaller, more affordable units,” said Ms Boothello. “This will put further pressure on rents over the next two quarters.”
Speaking about prospects for the Dubai property market ahead of next month’s Cityscape Global conference on September 5, Craig Plumb, the head of research for JLL Mena, reaffirmed his view that the Dubai market is close to the bottom of its current cycle.
“Providing there are no major external shocks, it is likely that this sector of the market will recover again from late 2016 or early 2017,” said Mr Plumb. “We believe the Dubai residential market offers good long-term growth opportunities and purchasing around the bottom of the cycle is always a good time to buy for those taking a long-term view.”
Although most of the research reports from UAE property consultants are predicting a flattening in the Dubai market, there are others who think it has further to fall.
Phidar Advisory’s Jesse Downs recently argued that price declines would continue throughout 2016 and into 2017 as liquidity and confidence remain weak. AT Kearney also recently predicted that developers from across the GCC face problems owing to overcapacity and a worsening economic climate.