Falling oil prices are believed to be behind a dramatic slowdown in the Dubai property market, a new report released yesterday by property consultants Jones Lang LaSalle (JLL) reveals.
Having witnessed surging house prices in the early stages of 2014 – by more than 20 per cent year-on-year in some areas – on the back of a booming economy, the emirate’s property market ended the year in rather more subdued fashion.
“Dubai’s real estate sector ended the year on a quiet note as nearly all segments of the market witnessed subdued growth levels in Q4,” the JLL report stated. “Average prices and rentals in the residential sector appear to have stabilised over recent months, with some locations registering marginal declines.”
JLL also noted that according to Dubai Land Department data, the number of residential transactions dropped 30 percent last year and their value fell 14 per cent.
“The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015,” the report predicted.
Another expectation released by the report is that: “As Dubai’s economy continues to expand and job creation grows, demand for affordable housing is expected to increase over the next 12 months. This comes as a proposal to ensure the availability of affordable housing for the middle-income segment of the market is currently under review. These efforts aim to create a balance between the supply of luxury and affordable housing units that cater to all residents in the Emirate, as many were previously priced out of the market during the 2013/2014 price rally.”
Due to its high and transient expat population, and its renowned reputation for investment potential, activity in Dubai’s property market has been dominated by overseas property purchasers since the early noughties when the emirate’s government spent millions specifically targeting foreign investment through property.