Dubai property market to grow in 2019

09:07

Dubai’s real estate market will gather momentum after the volume and value of sales transactions rose in the third quarter, but an influx of new supply could mute prices in 2019 while rentals continue to decline, analysts said.

The total value of real estate sales transactions in Dubai was up 56 percent year-on-year to Dh15.7 billion in the third quarter of 2018, and 18 percent month-on-month, according to the latest market update from Egyptian investment bank EFG Hermes.

Residential sales drove the increase, with all market segments (luxury, affordable and budget) recording higher transaction values on an annual basis in October. Total sales in the budget sector declined slightly on a month-by-month basis, the report added. The residential increase was driven by a 59 per cent rebound in off-plan sales on a monthly basis to total Dh2.3bn, a slight rise from the year-earlier period.

The best performing areas of Dubai in the third quarter were International City, Emirates Living and Mohammed Bin Rashid (MBR) City, while Arabian Ranches, Downtown Dubai and Jumeirah Park were the worst performing with the lowest uptick in transactions. Average selling prices across all segments climbed 3.8 percent month-on-month to reach Dh1,315 per square foot.

However, rental values continued to fall in the third quarter, according to EFG, continuing a “persistent downwards trend” recorded across most of the UAE’s real estate market coinciding with a three-year slump in oil prices that started in 2014 but turned started to rebound at the end of last year.

The macro-induced squeeze on consumer purchasing power has prompted a fight for affordability in both the rental and sales markets, pushing down prices in recent years, although the sales market is recovering as higher oil prices buoy investor sentiment.

The sustained lull in prices, however, has weighed on the most prominent UAE property companies’ earnings. All of Emaar Properties, Damac Properties and Aldar Properties reported double-digit declines in annual net profit in the third quarter, as the companies look to strengthen their balance sheets after a tough few years.

While higher oil prices and an increase in construction activity in the lead-up to Expo 2020 Dubai is expected to boost real estate market growth next year, property prices could continue to decline on a year-on-year basis due to the impact of rapidly rising supply.

A total of 19,881 residential units have been completed in Dubai this year as of October, the report said, with an additional 14,707 due to be completed in the next two months. A further 33,982 units are under construction, about 65 percent of which will be completed over the course of 2019.

Junaid Iqbal Mohammed Memon is an experienced entrepreneur and a keen observer of present trends and prospective ventures that offer profit possibilities. Presently, he owns a number of businesses and properties and manages them too. He also has ventures that are operating in the UK, Dubai, and India. Read more about Junaid Iqbal Mohammed Memon online here. Connect with Junaid Iqbal Memon on Crunchbase and join our network here. Follow Junaid Iqbal Mohammed Memon on his official Twitter page and keep up to date with our latest posts.

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