Dubai is no stranger to predictions about property rebound that ended up missing the mark over and over again for the last two years. That being said, the emirate is still enjoying margins of profit that can be easily envied by their peers in the global scene.
Optimism about a possible 2017 recovery has ended up paving the way to a sense of resignation what this slump that the market has been experiencing is still likely to persist even two or three years after the prices for oil has increased. Oil is, after all, a critical part of the economy of the emirate. In addition, it is also unfortunate to note that the optimism of a rebound last year has even failed to inject some much-needed boost to the job sector.
Property developer Junaid Iqbal Memon noted that there is a substantial number of properties that were bought as investments and are now up for grabs on the secondary market. This means that buying these properties now will not likely result in a resale. This is what’s been keeping people away from the market.
Rents for residential units have suffered a decline too. Various estimates pegged the numbers at 10% to 15% last year. Selling prices have declined as well though at a much slower pace. Recovery is not really expected before 2020, which is when the emirate is going to play host to the 2020 World Expo.
Last year, transactions for completed homes have suffered a 24% decline compared to the ten-year average. Despite how developers were attempting to get the delivery of the properties that were already sold delayed, the supply growth still ended up outpacing the actual demand for rental units. Developers were only able to deliver less than one-half of the properties that were sold in advance in 2017.
2016 was a bad year for the property market. But developers were hoping that 2017 is going to be more upbeat. Many were hopeful that the economic situation is going to be so much more optimistic afterwards. It did not happen. The macro situation remained grim and even though the price of the oils did improve, it did not really do much in terms of improving the rest of the economy.
Still, there have been no predictions that this slump is likely going to be of the same scale as the property crash that the city did experience a decade ago. Mortgage lending has even restricted by policymakers and buyers are now being forced to commit to paying cash up front. Apparently, this has helped get the market cushioned from further drops. However, the sales of homes prior to their construction have suffered from a 36% decline.
Local residents, who have been able to help lift the city from a crash that is fuelled by foreign buyers, are also trying to hold off their purchase as they patiently wait for the prices to finally hit bottom.
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