There has been a recent increase in oil prices to about $60 a barrel, which should be great news for you if you’re looking to sell property in Dubai fast in 2017, or buy real estate in Dubai online, for that matter. Here’s a look at the real estate trends in Dubai in 2017.
Residential property prices in Dubai have been doing much better than they did this time a year back. That’s because the property market here is closely linked to the latest oil prices. As you are probably aware, oil prices dropped to as low as $30 at a point in 2016, sending shockwaves throughout the Middle East.
The market fundamentals in Dubai are much better than they have been for many years. The regulatory environment is much more prudent than it used to be in the past, which is why there is a sense of normalcy in the real estate market here. Things are certainly a lot more stable than they have been since the economic recession of 2009.
KPMG, one of the world’s leading consultancies, released a report recently on the Dubai real estate market, titled ‘Building Confidence’. The study focused on the residential property market in Dubai in particular.
As Sidharth Mehta of KPMG explains, “While oil prices remain well below the long-term average, which is clearly having an effect on market confidence, Dubai’s improved regulatory environment, broader investor profile, and increased maturity are all indicators that its real estate market should eventually self-correct.”
Based on the study by KPMG, we arrive at the 5 major trends that will leave an impact on real estate prices in Dubai in 2017 and beyond.
#1: Oil prices will have the biggest effect on property prices, as discussed earlier. The Dubai property boom of 2003 to 2008 coincided with high oil prices, and the decline in the property prices with low oil prices.
#2: Liquidity is going to play a big role as well, as markets begin to tighten. One expects the high interest from domestic investors and investors from other Middle Eastern countries to provide the property market with a flush of liquidity.
#3: The supply and demand equation is Dubai is woefully mismatched – the supply is much larger than the demand for properties as far too much excess capacity has been built up over the last decade and a half. Everywhere you go in Dubai, you will find swanky new apartments for which there are no takers. Property prices are unlikely to rise too fast as long as the excess inventory is brought down in some form or manner.
#4: There is now a huge demand for more affordable housing options in Dubai. A number of new apartment complexes have come up that are targeted at the middle class. The goal is to take the focus away from luxury properties, which are most at risk to the vagaries of the market and to appeal to a much more diverse demographic.
#5: The rental market has suffered greatly, largely because of the massive job losses seen in Dubai over the last few years. The lack of demand has driven down rents across Dubai, and this in turn has had a negative impact on the property market. But now it does look like there is a newfound stability in the rental market, which augurs well for the real estate market in Dubai.