Prices in the Dubai residential property market have been predicted to carry on falling in 2019, continuing the fall seen during 2018.
The Middle East chief executive of Savills has predicted that Dubai residential property prices could fall by 5 to 10 per cent in 2019, weakened by new supply, a strong dollar and lower oil prices.
Over-supply in the Dubai residential property market has caused a steady fall since the mid-2014 peak, hurting earnings of the emirate’s top developers and forcing construction and engineering firms to cut jobs and halt expansion plans.
While the latest fall in house prices has not come close to the more than 50 per cent plunge seen in 2009-2010, which pushed Dubai itself close to a debt default, Dubai residential prices fell by 6 to 10 per cent in 2018, according to Savills’ Steve Morgan.
Mr Morgan thinks that a similar drop in Dubai residential property prices could be repeated in 2019.
The United Arab Emirates, which Dubai is part of, is experiencing its latest real estate slump along with other parts of the Middle East, largely due to oversupply, although a strong dollar and lower oil prices are also a factor.
The UAE dirham is pegged to the dollar, making the country more expensive for those holding other currencies, while oil is a major driver of regional wealth.
While Mr Morgan said he was ‘bullish’ that Dubai was heading towards the bottom of its property market downturn, he cautioned that he had thought the market touched bottom a year earlier.
S&P Global Ratings’ analysts said last year the market could decline by 10 to 15 per cent in 2018 and 2019 before stabilising in 2020 at the earliest.
Overseas property investors interested in the Dubai residential market may wish to employ a wait and watch strategy.