- Value of deals down 16 percent in first half
- Off-plan sales now account for half of transactions
Dubai Land Department (DLD) said the value of real estate transactions in the first six months of 2018 was 111 billion dirhams ($30.2 billion) across 27,642 transactions.
The DLD did not provide comparative figures for the year-earlier period, however data released by the department last year reflects a 16 percent decline in the value of deals and a 22 percent drop in their overall number.
The property market in the emirate has been battling headwinds from rising US interest rates, expatriate job losses and a strong US dollar, to which the dirham is pegged, making property purchases expensive for many overseas buyers.
To counter these downward pressures on property market sentiment, the Dubai government has started to introduce reforms aimed at boosting confidence and overall business activity.
“Granting investors a UAE residency visa for up to 10 years and reducing government fees included in previous initiatives will be of the most important incentives for economic growth in the emirate, as they will have a positive impact on reducing business costs,” said Sultan Butti bin Mejren, director-general of Dubai Land Department.
The UAE non-oil economy is expected to “turn the corner” next year, Bank of America Merrill Lynch said in a report last month — helped by Expo projects, changes to the workers insurance schemes and fiscal stimulus measures announced by the Abu Dhabi government.
Still, despite such efforts, the residential property market is bulging with newly completed homes built by developers offering off-plan payment schemes.
Off-plan sales, where purchasers commit to owning a property before it is built, now account for more than half of all property transactions in the emirate.
As many as 45,000 new homes could hit the market this year with a similar number slated for completion in 2019, according to figures from JLL, the international real estate consultancy.
Dubai residential property prices and rents declined by 5 to 10 percent overall in 2017, according to data from Standard & Poor’s (S&P), the credit ratings agency.
It expects the downturn in Dubai’s property market to continue until 2020.
Rising US interest rates are also hurting the market as many mortgage products are either directly or indirectly linked to prevailing rates set by the Fed. It represents a double whammy for the property market.
Another drag on real estate sentiment has been large-scale expatriate job losses in the past two years from major employers across the energy, aviation and financial sectors. This has reduced demand in both the rental and
sales markets.
Developers are hoping that the much-vaunted Expo 2020 event will spur confidence in real estate and help to boost overall demand as construction activity picks up.
The DLD said that UAE nationals topped the list of property buyers in the first half of 2018, followed by Indians and Saudis.
The Business Bay district close to Dubai’s financial center recorded most transactions during the first half of the year followed by Dubai Marina, the DLD said.