Dubai’s real estate sector will “hover” near the bottom of the market while it undergoes a “period of stabilization” over the coming year, even as the rate of decline of sale and rent prices slows on a quarter-by-quarter basis, according to Dana Salbak, the head of MENA research at real estate invest and advisory firm JLL.
In an interview with Arabian Business, Salbak said that Dubai’s real estate market has softened over the last several years following an uptick following the 2014 announcement that Dubai will host Expo in 2020.
“That was not something sustainable in the long-run,” she said. “We started to see prices and rental rates subside and slow down over the last couple of years.”
The rate of decline, however, has slowed, with sales prices falling by 1 percent for apartments and 3 percent for villas in Q4 compared to Q3 2019.
Higher declines were recorded on an annual level, with apartment rents and sales prices declining by 8 percent and 5 percent, respectively. Similarly, villa rent and sales prices declined by around 8 percent and 10 percent respectively when compared to the same time period in 2018.
The JLL data shows that “primary” areas – such as Downtown Dubai and Dubai Marina – saw further declines but continued to perform above average, while secondary locations, such as Motor City, JVT and JVC, saw steeper declines.
Even with these declines, Salbak added, the market is “not quite” where it was compared to the 200 and 2009 global financial crisis.
“The market is really adjusting, more so than being a ‘crash’ or a bubble burst,” she said. “We’re actually quite positive and optimistic. It shows the market is more mature and more sustainable. We’re calling it a period of normalisation.”
According to Salbak, sale and rental prices are likely to “to hover at the bottom of the market for some time”, with any Expo-related uptick already factored into the market at the time of the 2014 announcement.
“We think the market will hold for some time, and potentially see further declines for some time, but nothing drastic that should scare anyone,” she said. “I think [rent and sales prices] will continue to fall, but at a much slower rate of 1 to 5 percent declines. Some areas will have no declines.”
“The market will remain tenant friendly, and tenants should definitely push for lease negotiations,” Salbak added.
Source Arabian Business