During past couple of decades, Dubai’s real estate market has seen all the highs and the lows, creating and destroying fortunes. Recently, we have seen the trend diminish as the market continues to stabilize. In 2002, Dubai came into the spotlight after it launched an attractive real estate market by opening some freehold zones for foreign buyers.
After a brief financial crisis rocked the region in 2009 and simmered down in recent times, Dubai remains as the top destination for foreign expats to invest, thanks largely in part to attractive real estate values.
Real estate prices reached their highest in 2008, driven by speculative investments but nosedived as the global financial crisis hit the market. The property value and the rents regained value between 2012 and 2014. The prices dropped again, though it was a slow drop, meeting the analysts’ predictions.
Prices dropped by 12 percent last year, according to Craig Plumb, Head of MENA research at property consultancy.
The market is having something of a soft landing at the moment, so the prices have been now falling for over a year… We think the market will continue to drop a little bit more, but not as much as it already has. We think that most of the decline we’ve already seen. – Craig Plumb
The drop seen in 2015 was about 10 percent, says Dana Salbak, head of MENA research at Knight Frank property consultancy. According to her “We saw a slowdown in the residential sector. We saw prices dip about 10 per cent over 2015. Not so much in the first quarter of the year.”
Dubai’s market depends in investment from foreign countries. As the demand fell, currencies have fallen against the US dollar just like US Dollar, increasing the prices, said Plumb. Knight Frank said in the 2015 report “Real estate in Dubai is now more expensive for buyers holding other currencies.”
India tops the list of foreign investors in Dubai. In 2015, they spent over 20 billion UAE dirhams ($5.4 billion) out of the total 135 billion UAE dirhams invested in Dubai. During the same year, the British and the Pakistani buyers followed with 10.8 billion and 8.4 billion UAE dirhams. The other major investors belong to Iran, with 4.6 billion dirhams, Canada, with 3.7 billion dirhams and Russia, with 2.7 billion dirhams.
Dubai’s real estate market has seen a slowing growth. This, in turn, has created fewer jobs resulting in fewer people demanding property. Although, Dubai doesn’t rely on the decreasing oil resources, the plunge seen by other Gulf states has put indirect pressure on it. However, a collapse in market value like 2009 is not on the cards and the market would reach a flat point sometime in 2016.