“What do you think will happen to the Dubai property market?” is hands down, one of the most asked questions of 2018. Going into 2019, this is an increasingly pressing issue and thus, still lingers in the minds and mouths of expats, investors and virtually anyone who takes an interest in the intricacies of the Dubai property market.
Dubai’s current real estate environment is often described as a “buyers’ market”. In early 2018 it became starkly clear that it was being consumed by an oversupply of property as compared to a slowing down in demand for the same, which placed a downward pressure on prices. This was coupled with more attractive payment plans in the off-plan market, more accessible home loan offers, the granting of long-term property investor visas and the absorption of service charges and fees on key projects, by big players like EMAAR and even the Dubai Land Department. Dubai is currently a “buyers’ market” because ultimately, property ownership for residents was and has been rendered more desirable than renting a property.
The higher-end properties are now being purchased as homes instead of as investments and off-plan properties have begun focusing on creating good quality affordable housing. Meanwhile, commercial properties struggled throughout 2018 and going into 2019. All in all, “according to the latest data by the Dubai Land Department, Dubai’s real estate sector experienced a year-on-year increase in investments in the first 9 months of the year, totaling nearly $14bn”. There was also an influx of the Chinese expatriate whose investment is likely to skyrocket in 2019.
The good news is that the market is not dead; it is simply adjusting to the oversupply of property. The sun shines bright for residential properties and even though they are not being sold at the prices they once were, there might be some light at the end of the tunnel for sellers who are sending funds to the UK or Europe in Pound Sterling/Euro, with the current exchange rates bridging the gap, so to speak. Interestingly, it is the commercial property sector that is under great pressure. A different kind of investment is being incentivized in 2019 through the aid of government policies like the property-investor visa and favorable house loans and payment plans. Someone who previously might’ve bought a prime property as an investment, is now interested in purchasing it as a residence. Good quality affordable housing for rent is also in high demand. With Expo 2020 just around the corner, the hope is that the oversupply will somewhat be absorbed and therefore prices might rise, however the extent to which they do, remains a curious question mark.
No one can know for sure what the future of the Dubai property market holds—here at Your POA, we cannot wait to find out!