There is potential for residential real estate prices in Dubai to decline by another 5-10% this year before the market hits the bottom, said Steve Morgan, CEO of Savills Middle East on Monday.
Dubai’s over-supplied property market has steadily fallen since a mid-2014 peak, hurting earnings of the emirate’s top developers and forcing construction and engineering firms to cut jobs and halt expansion plans.
While the latest fall in house prices has not come close to the more than 50% plunge seen in 2009-2010, which pushed Dubai itself close to a debt default, residential prices fell by 6-10% in 2018, Savills’ Steve Morgan said. And this drop could be repeated in 2019, he added.
The United Arab Emirates, which Dubai is part of, is experiencing its latest real estate slump along with other parts of the Middle East, largely due to oversupply, although a strong dollar and lower oil prices are also a factor.
The UAE dirham is pegged to the dollar, making the country more expensive for those holding other currencies, while oil is a major driver of regional wealth.
Morgan said he was “bullish” that Dubai was heading towards the bottom of its property market downturn, although cautioned he had thought the market touched bottom a year earlier.
S&P Global Ratings’ analysts said last year the market could decline by 10 to 15 per cent in 2018 and 2019 before stabilising in 2020 at the earliest.
Source Credit: Gulf Business