Dubai Property Market to Grow In 2019 As October Sales Rebound
Dubai’s real estate market will gather momentum after the volume and value of sales transactions rose in the third quarter, but an influx of new supply could mute prices in 2019 while rentals continue to decline, analysts said. The total value of real estate sales transactions in Dubai was up 56 per cent year-on-year to Dh15.7 billion in the third quarter of 2018, and 18 per cent month-on-month, according to the latest market update from Egyptian investment bank EFG Hermes.
Residential sales drove the increase, with all market segments (luxury, affordable and budget) recording higher transaction values on an annual basis in October. Total sales in the budget sector declined slightly on a month-by-month basis, the report added. The residential increase was driven by a 59 per cent rebound in off-plan sales on a monthly basis to total Dh2.3bn, a slight rise from the year-earlier period.
The best performing areas of Dubai in the third quarter were International City, Emirates Living and Mohammed Bin Rashid (MBR) City, while Arabian Ranches, Downtown Dubai and Jumeirah Park were the worst performing with the lowest uptick in transactions. Average selling prices across all segments climbed 3.8 per cent month-on-month to reach Dh1,315 per square foot. However, rental values continued to fall in the third quarter, according to EFG, continuing a “persistent downwards trend” recorded across most of the UAE’s real estate market coinciding with a three-year slump in oil prices that started in 2014 but turned started to rebound at the end of last year.
The macro-induced squeeze on consumer purchasing power has prompted a fight for affordability in both the rental and sales markets, pushing down prices in recent years, although the sales market is recovering as higher oil prices buoy investor sentiment. The sustained lull in prices, however, has weighed on the most prominent UAE property companies’ earnings. All of Emaar Properties, Damac Properties and Aldar Properties reported double-digit declines in annual net profit in the third quarter, as the companies look to strengthen their balance sheets after a tough few years.
News Source: The Gulf News
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