Dubai home purchases plummet to five-year low
Dubai home purchases plummet to five-year low
‘It seems stakeholders forget to ask the simple question: who will live here and why?’
The transaction volume of off-plan and existing homes in Dubai in the third quarter stood at 900 units, according to a report by real estate firm Phidar Advisory. This is the lowest level recorded in the emirate since 2011.
India and Saudi Arabia, the two most dependable sources of investment in Dubai, are purposely missing out on the emirate’s property cache this cycle around.
Historically low petroleum prices are driving a wedge between Arab buyers and Dubai residential real estate. Indians, on the other hand, are put off from investing in Dubai homes because of the depreciating dirham, a currency that is not pegged to the US greenback.
“The recent interest rate hike by the US Fed will likely support US dollar strength and, combined with a still relatively low oil price, will continue to constrain investment demand for Dubai real estate in the coming year,” Jesse S. Downs, managing director at Phidar Advisory, said.
More: These islands will apparently be the ‘Dubai of the Philippines’
India and Saudi Arabia were the largest investors in Dubai properties in H1, with AED7.3 billion (USD2 billion) and AED2 billion (USD544 million) in investments, respectively, according to Dubai Land Development.
Phidar reported an increase in transaction volumes in Dubai homes in November from September, but this is likely only “a reflection of seasonal variance,” Downs said.
Job cuts are increasing occurrences in Dubai, as low-paying industries step up to become the most active employment generators in the emirate, she observed. This scenario will curb rental inflation and, in turn, depress transaction values.
“It seems stakeholders forget to ask the simple question: who will live here and why?” Downs told The National.
Read next: Dubai: 4 things we know so far about its slumping market
Source: Property Report