There are signs that confidence may be returning to the Dubai property market, despite an over-supply of new off-plan properties.
A new report from Chestertons, the real estate broker, has shown that although apartment and villa sales prices were down 2 per cent and 3 per cent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilising.
Supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019. However, that could slow during 2020 as previously reported, and confidence seems to be growing among overseas property investors.
Confidence is also growing in the rental market, where no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract.
Chris Hobden of Chestertons MENA commented: ‘The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the levelling of rental rates. This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.’
He continued: ‘To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely.’
As previously reported, research by the Property Finder Group found that building in Dubai is likely to slow in 2020. That coupled with the renewed confidence in the Dubai property market may mean that overseas property investors should once again consider the middle eastern destination.