Dubai’s residential real estate sector appears to be bottoming out following a three-year price slump and with brokers reporting growing interest from potential investors, now could be the optimum time to buy, says Propertyfinder Group, the Middle East’s leading real estate portal.
Dubai’s slowdown contrasts with the overheated New York and Hong Kong property markets, which along with the emirate are among the most popular with international investors. That divergence has helped make Dubai a better-value prospect.
"Dubai property prices have been falling since mid 2014 and are now at levels not seen since late 2012/ early 2013 back when Gangnam Style was top of the charts, Fifty Shades of Grey was the best seller and some of us still used a Blackberry. Dubai is far more complete, more regulated and far more mature city today". says Lukman Hajje, Propertyfinder Chief Commercial Officer.
In the 18 months from November 2015 to April 2017, median Dubai property sales prices fell 20%, exclusive Propertyfinder data shows, while median rental prices dropped 21% over the same period.
With a further 28,000 new units in Dubai scheduled for release by year-end, consultants JLL estimate, it might seem sensible to conclude Dubai prices will remain in the doldrums until 2018 at least.
But even were that to happen, the sustained slump has bolstered yields, protecting buy-to-let investors from a further downturn in the rental sector. The pace of declines in both rental and sales values has also slowed, Propertyfinder data shows.
“In the popular Springs community, it is now possible to achieve net yields of up to 6.5 % and net returns on equity of circa 10% for finance buyers using 75% loan-to-value mortgage products,” says John Lyons, Head of Sales & Leasing at Espace Real Estate, a long-standing Propertyfinder client. “This provides great financial incentive to buy rather than rent.”