The year 2016 has brought downhill road for the UAE’s property market as it hit its lowest mark in terms of price due to the historical decline of oil prices and few shocking events including Donald Trump win in the US election resulting a rise in US dollar value and Britain shocking vote to leave the European Union keeping pound value at all time low.
At the beginning of this year, the Brent crude (trading classification of sweet crude oil) price had gone down to $28.94 a barrel which was at its peak about $100 a barrel back in 2011. This huge descent caused a drop in home prices in Dubai and Abu Dhabi. According to some property data companies, the average house prices and rents are dipped by 12 per cent and 8 per cent respectively in Dubai whereas it went down by 3 per cent and 4 per cent respectively in Abu Dhabi.
Another factor is the hike in dollar price to its historical high along with a raft of new cooling measures imposed by the Dubai Land Department. Also in June, UK voted itself to leave the European Union that affected pound value to historical lows. The strong dollar currency and weak pound restricted many overseas buyers to invest on UAE real estate market as they were finding it more expensive. This declined all the predictions from brokers who, since the start of 2016, had been expecting the beginning of recovery period in the mid year.
But external shocks continued to push the situation on worse even by the end of year as Donald Trump was elected as the US President. The dollar jumped again due to a rise in interest rate imposed by the Federal Reserve. In the light these factors, the chances of recovery are diminished at least for next few months.
Despite the continuous fall in market price, brokers and real estate experts are being optimistic as Dubai Government will be spending on infrastructure next year ahead of Expo 2020 which is going to create many job opportunities. In fact, the oil prices are already up by about 20 per cent after a global deal in the last month and the average sales prices in areas such as Dubai Silicon Oasis, Dubai Sports City, International City and Discovery Gardens had risen by between 3 and 5 per cent from its lowest.
But according to Cluttons’ research, recovery may not be seen until the end of 2017.
“While Dubai’s economy is still diversified, it’s the senior-level jobs that have been lost,” say Faisal
Durrani, Head of Research, Cluttons.
“Also, the rate of [job] replacement and creation has slowed down.” He adds.
Source: The National