A new report suggests that property prices in Dubai are going to increase leading to the Expo 2020. After several years of price decline, the numbers are expected to bounce back this year as population growth in the city has now outpaced the presence of new supply.
The real estate market in the UAE may start to experience a turnaround this year after several years of declining property prices. Propertyfinder Group revealed that apartments have been experiencing some low fall in their selling prices, with the decline being in the single digits. This is a trend that has been experienced in a majority of areas in Dubai. Villa prices have also experienced similar declines especially in Meadows at 9.3%, Dubai Land at 8.2%, Furjan at 8.1%, as well as Jumeirah islands at 7.1%.
There is a popular sentiment that these prices are already very close to, even at the bottom of its cycle. This means that the only way for it to go is up as the Expo 2020 draws near. It is also expected that there will be an increase in the offerings when it comes to emerging communities that are offering a more affordable pricing. This is especially true in the segments offering sub-1 thousand or sub-1 million AED for a per-square-foot pricing. This sector has always been underserved during the earlier construction booms that the UAE city has experienced.
The rallying of the oil prices which has been felt for the last few weeks means things are boding well for the real estate market. Oil prices have recorded a 3-year high and this means a more bullish outlook for the property market.
It is also noted that current data shows that population growth has now outpaced the presence of new supply at a 2:1 ratio. This means that this year is likely to follow a trajectory that is quite similar and it is expected to help further strengthen the demand. It is being hoped too that this will then help offset the recent increase in supply.
In addition, property investments are still able to command healthy yields ranging from 6% to 8% which suggest that Dubai, as well as Abu Dhabi, remain among the list of options that investors and landlords deem attractive.
It is also noted that most homeowners have avoided the brunt of the recent changes that were introduced in the tax policy in the UAE. This means that most of them still do not need to have to pay any tax on property appreciation, capital gains, rental yields, as well as salaries in the UAE.
With the significant decline in property prices for the past year and with pricing in its lowest per square foot, it is expected that 2018 is going to see the market bounce back. Pricing is expected to be normalised this year.
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