Dubai property agents remain optimistic as pipeline swells
The pipeline of new properties due for completion in Dubai this year continues to swell, while agents are confident that the low volumes experienced for house sales over the past two years is about to pick up, according to Cavendish Maxwell.
The property consultancy’s fourth-quarter residential survey states that 61,000 homes are scheduled for completion this year, with this number swelled by the fact that 13,000 units that were anticipated to be completed last year slipping over into 2017. It also added that “delays are likely to greatly reduce activity” this year.
The company said that 16,400 new homes were handed over last year, with the bulk of these in Dubailand and Dubai Silicon Oasis.
It said transaction volumes for sales dropped by 19 per cent year-on-year, citing 14,500 deals between January and mid-December. Average apartment prices dropped by 3.4 per cent year-on-year and villas fell by 3.6 per cent, but the rate of decline slowed towards the end of the year.
Sofia Underabi, the head of residential valuation at Cavendish Maxwell, said: “Marginal declines are expected to continue in 2017, and a turnaround will be largely dependent on oil prices and US dollar movement.”
She said that residential demand is driven by expat employment growth, but recent redundancies have kept net jobs growth fairly low.
“In comparison, residential supply continues to expand, albeit at slower rates than pre-2009 and 2013-14 levels.”
A poll of agents carried out by Cavendish Maxwell found that 55 per cent expect agreed sales volumes to increase during the first three quarters of this year, while 11 per cent predict a decline and 34 per cent forecast a flat market.
In Abu Dhabi, meanwhile, apartment prices in investment zones dropped by 2 per cent year-on-year, while villa prices dropped by 2.5 per cent. Again, the pace of price falls slowed at the end of the year, but research manager Manika Dharma said: “While the rate of decline in Q4 2016 has slowed in comparison to the first half of the year, the residential market in Abu Dhabi is expected to remain under pressure from redundancies in the oil and gas sector, cuts at key employers such as Etihad and job losses likely to result from the mergers of NBAD-FGB and Mubadala-Ipic.”
More than 1,900 new homes were handed over in investment zones in the emirate last year, and a pipeline of 8,300 are due for completion this year.
A survey published this week by Al Masah Capital stated that it expects 57,000 new homes to be completed in Dubai between the last quarter of 2016 and the end of 2018, with 53 per cent of those due for handover this year.
“Going forward, this supply is expected to be absorbed as the economy gains momentum and the city sees an increase in its expatriate workforce due to upcoming events such as Expo 2020,” it said.
Follow The National’s Business section on Twitter