UAE Property Market report asserts that an increase in the rate of economic expansion is expected in 2018 and 2019, underpinned by higher spending levels. For the country’s real estate markets, this is expected to translate into widespread stability and marginal growth in some segments by the end of 2018.
Experts said: “We see a number of positive indicators for the UAE’s property market as we head towards the fourth quarter of 2017. While Expo 2020 is well documented as the shining light on the horizon, we view the government’s plan to introduce a formal tax regime as a tremendously positive step and are confident that it will help cement much-needed alternative revenue streams. Once the market absorbs the changes caused by the introduction of VAT, we expect to see a resumption in growth.”
While the market continues to recover, the report also highlights how each emirate is performing in the aftermath of the oil price drop, which is the single biggest factor that has impacted the market in recent years.
Latest report indicates that values across Dubai’s residential investment areas continued to moderate during Q2 2017, dipping by an average of 1.5%. This leaves the annual rate of change at -5.8% and marks the 12th consecutive quarter of price declines, during which time prices have moderated by 14%. Apartments continue to fare better than villas, with prices decreasing by an average of 1% during Q2, compared to a 2.2% drop in villa values.
Although prices have continued to fall, soft correction in the market appears to be nearing an end, with many locations starting to show signs of bottoming out, as previously reported by Cluttons. In fact, during the first six months of 2017, just seven of the 32 submarkets tracked in the emirate registered price falls, with all other locations seeing no change in values.
In the rental market, experts expects continued moderation during 2017. The consultancy forecasts rents to end the year 5% to 7% lower than 2016, but like the sales market there is growing potential for a more stable picture to emerge, as the Expo effect starts to filter through. Villa rents are expected to end the year 10% down on 2016, while apartments are expected to demonstrate greater stability, with virtually no change in average rates when compared to 2016.
“Our view is that the rental market’s fortunes remain tied to the looming Expo 2020. At this stage, the mega event is one of the primary upside risks to our outlook, especially as we expect it to drive up the rate of job creation and tenant demand, but this is not expected for another one to two quarters at least.”