Dubai property sector to benefit from increased budget spending
Dubai’s property markets are likely to move back into growth by the end of the year, underpinned by its expansionary budget, according to a new study.
A report from ReidIn/Global Capital Partners said that Dubai’s 12 per cent budget increase will serve as a fiscal stimulus.
That contrasts with its response in 2008, when spending cuts imposed as a result of the global financial crisis “amplified the contractionary impact on the economy”.
It said that there was “an intertwined relationship” between budget spending and property prices, with an increase in the former having a positive impact on the latter.
Global Capital Partners’ managing director, Sameer Lakhani, predicted a recovery in property prices later this year.
“There’s a whole bunch of reasons why we see this,” he said
Affordable homes in areas such as Discovery Gardens and International City have declined by only half of the rates experienced in more expensive communities.
He expected that with continued population growth of between 5 and 7 per cent, fuelled by the arrival of more middle-income families, and with transaction levels already showing an increase within certain communities, an “inflection point” would be reached by the end of the year as the market moves back into growth.
Other analysts are not so optimistic.
Phidar Advisory suggested that prices could drop by a further 20 per cent through this year and the next as rents soften. Deloitte has also predicted sales price and rental declines for 2016.
Nicholas Maclean, the managing director for CBRE Middle East, said that he felt that “there is still some room to go in terms of price reductions”, and that he expected further falls at the lower end of the market identified by Mr Lakhani.
“The reductions in value have come at the middle and the upper parts of the marketplace. That means that mid-sized housing, compared with more economical housing, is probably now out of kilter. So there is room for lower cost housing to decline over the course of the year.” Once that happens, he said the market would plateau at the end of this year.
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Updated: January 24, 2016 04:00 AM