Is 2018 The Year of Turnaround for Dubai Property Prices?

According to analysis in Propertyfinder Trends, property prices are ripe for a rebound. Oil may command $80 a barrel by year’s end, according to a report by Barron’s, and given its importance to this part of the world, it would not be the only rally we see this year.

How low can they go? Property prices are still dropping since the market’s apex in mid-2014, according to asking price data from the latest edition of Propertyfinder Trends. The continued down cycle is leaving investors and analysts anxious to announce the market is reaching its bottom and will rebound soon.

“Popular sentiment is that prices are at, or very close to, the bottom of the cycle and will increase in the lead-up to Expo 2020,” says Lukman Hajje, Chief Commercial Officer of Propertyfinder Group. “There will also be an increase in product offerings in affordable emerging communities in the sub-one million AED, sub-one thousand AED per square foot segments, which were historically underserved during Dubai’s earlier construction booms.”

The oil price rally over the last four weeks, which has reached a three-year high and keeps on going, means there may be more reason to be bullish on the UAE.

Here are a few more reasons to believe 2018 is the year of the turnaround:

1. Population growth outpaced new supply by two to one in Dubai in 2017, according to real estate data portal ReidIn. This year will likely follow a similar trajectory. Given transactions were on an upswing last year, demand is strengthening, potentially offsetting the rise in supply.

2. Property investments still command healthy yields, meaning Dubai and Abu Dhabi are attractive options for aspiring investors-turned-landlords. Six to eight per cent is the norm in Dubai, and the same is true in the capital.

3. Even with the introduction of VAT, homeowners largely avoided the brunt of the historic change in tax policy. There are still no taxes on capital gains, property appreciation, salaries, or rental yields in the UAE, a rare experience for most expats.

In the latest edition of Propertyfinder Trends, Kalpesh Sampat, a Managing Partner at Gulf Sotheby’s, weighed in on his 2018 property market forecast. He highlights the above points, as well as several others. He says, “With real estate prices declining significantly in the last 12 to 18 months, and with the lowest price per square foot across 10 major international cities, Gulf Sotheby’s is predicting that 2018 will see an uptick in the market, especially for the ready segment.”

Another voice in the chorus for a price turnaround in the UAE — but, as they say, time will tell.