Dubai's housing market has shown a decline in prices for the first time since 2020. According to the ValuStrat index, they decreased by 5.9% in March compared to the previous month, although even this drop only means a return to the level of six months ago. The main reason is the regional conflict, which has affected demand from foreign investors and wealthy expats, who previously turned Dubai into one of the hottest spots on the global real estate market.
Sales also suffered:according to REIDIN, the turnover of residential transactions decreased by almost 20% to 37.2 billion dirhams (10.1 billion US dollars), and their number decreased from 16,000 to about 13,000.
The head of Betterhomes, Louis Harding, warns that the market will not return to its previous state instantly, and a "softening of prices" is expected. He is also preparing for a "lean and difficult" summer season in terms of deals.
Of particular concern is the "off-plan" market (selling housing before construction begins)It was he who triggered the crisis of 2009, when Dubai was on the verge of default. Currently, this segment accounts for almost three quarters of all transactions, and in March, sales in it fell by 13%. Experts note that the "off-plan" suffers first because of its speculative nature.
Nevertheless, many developers remain cautiously optimistic. SOHO CEO Sahil Khosla said he does not expect a collapse, as there are more end users on the market than ever, and the current decline follows a prolonged rise in prices (they have been going up for 5 years). Shares of the largest developer Emaar Properties have already recovered by 16% from March lows.
Some companies are starting to offer incentives to keep up with demand, such as reduced down payments. At the same time, new projects continue to be announced by various developers, from Emaar to Danube Properties. According to the head of Samana Developers, sales are progressing, albeit more slowly, with buyers coming not only from the UAE, but also from Egypt and India.
Additional risks are associated with the closure of the Strait of Hormuz;(which will raise prices for building materials) and the fact that April, according to CBRE forecasts, will continue the March trend of reducing transactions. However, the long-term sustainability of the market is supported by "golden visas", which transform Dubai from a transit hub into a permanent home for many foreigners.
Source: Economic Times
