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Dubai free fall real estate prices now bottoming out
| Published: | 17 Nov at 6 PM |
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Tagged: Property Abroad, Dubai
Given that it hasn’t gone unnoticed in Dubai’s expat community that real estate prices are falling, what’s on the cards for foreign property investors next year?
Unsurprisngly, property values in Dubai’s residential enclaves continued to fall during this year’s second quarter, with the average decline set at about 1.5 per cent. It’s the 12th consecutive quarter in which prices have dropped, making a total fall of 14 per cent since the decline began. As a result, average house prices are now almost 30 per cent lower than in 2008’s market peak.
Apartments are holding their value better than villas, with prices dipping by one per cent as against a fall in villa values of 2.2 per cent. Exceptions to the trend are villas in two exclusive submarkets, Motor City and Jumierah Village, with the former only 2.6 per cent down on its 2008 high and the latter down by 3.6 per cent. In contrast, villas on the Palm Jumeirah have lost around a third of their 2008 value, and apartments are down by between 20 and 71 per cent.
Over the past nine years, the smallest price recovery is in Burj Khalifa prices, down by 70 per cent from their previous high point. According to property agents in the region,, the ongoing correction in Dubai’s residential real estate market seems to be bottoming out, although affordability is still an issue for many would-be buyers. At present, household budgets are being strained by sharp increases in the cost of living as well as two per cent plus inflation and the threat of the looming VAT regime.
The market is now similar to that in Abu Dhabi, with the home ownership dream fading for many would-be buyers. Average incomes in Dubai are around $55,000 per annum, meaning a mortgage calculated at a multiplier of three or four times a buyer’s yearly income on a home costing from $163,000 to $218,000 would be unaffordable for a large majority of residents. The city’s affordable housing districts are limited, with Discovery Gardens and International City the best-known, but it’s a niche market and values have held up over the past 18 months as a result.
Unsurprisngly, property values in Dubai’s residential enclaves continued to fall during this year’s second quarter, with the average decline set at about 1.5 per cent. It’s the 12th consecutive quarter in which prices have dropped, making a total fall of 14 per cent since the decline began. As a result, average house prices are now almost 30 per cent lower than in 2008’s market peak.
Apartments are holding their value better than villas, with prices dipping by one per cent as against a fall in villa values of 2.2 per cent. Exceptions to the trend are villas in two exclusive submarkets, Motor City and Jumierah Village, with the former only 2.6 per cent down on its 2008 high and the latter down by 3.6 per cent. In contrast, villas on the Palm Jumeirah have lost around a third of their 2008 value, and apartments are down by between 20 and 71 per cent.
Over the past nine years, the smallest price recovery is in Burj Khalifa prices, down by 70 per cent from their previous high point. According to property agents in the region,, the ongoing correction in Dubai’s residential real estate market seems to be bottoming out, although affordability is still an issue for many would-be buyers. At present, household budgets are being strained by sharp increases in the cost of living as well as two per cent plus inflation and the threat of the looming VAT regime.
The market is now similar to that in Abu Dhabi, with the home ownership dream fading for many would-be buyers. Average incomes in Dubai are around $55,000 per annum, meaning a mortgage calculated at a multiplier of three or four times a buyer’s yearly income on a home costing from $163,000 to $218,000 would be unaffordable for a large majority of residents. The city’s affordable housing districts are limited, with Discovery Gardens and International City the best-known, but it’s a niche market and values have held up over the past 18 months as a result.
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