Dubai’s property market has not seen any major impact from the recent oil price drop, a senior executive has said.
“For consumers and real estate companies, it’s a very far relationship with oil prices,” Deyaar chief executive Saeed Al Qatami told journalists on the sidelines of a property launch event.
“Oil prices do impact oil-producing countries such as the UAE and there have been concerns whether the government’s plans, infrastructure projects and other commitments will be affected.
“But the UAE government is very stable and has huge surpluses hence it is ready to meet all its commitments,” he said.
Oil prices have dropped by around 50 per cent from peak prices in June 2014 to roughly $50 per barrel at present because of a supply glut and fears of dropping demand.
The United Arab Emirates is expected to post its first budget deficit since 2009 this year, because of the low oil prices, the International Monetary Fund has predicted.
While there is negative sentiment in the market, which in turn can affect property investors, Al Qatami stressed that it was temporary.
“Oil prices do impact the overall market sentiment, but sentiments can change over a short period of time,” he said.
In Dubai, projects such as the Al Maktoum airport expansion, Dubai Parks and Resorts; Expo 2020 requirements; and the growth of airlines such as Emirates and flydubai will ensure that there will be a lot of job opportunities, leading to a demand for more housing, he added.
Dubai’s property market has seen a slowdown since the start of 2015 following two years of heady growth. According to official figures released by the Dubai Land Department, residential transactions fell 66 per cent in value and 69 per cent in volumes year-on-year in the first half of 2015.
A report from consultancy JLL noted that apartment sale prices dropped 9 per cent year-on-year in Q2 while villa prices fell 5 per cent during the same period.
However Deyaar has not seen any drop in prices within its projects so far this year, Al Qatami said.
“If you look at the leasing yields, they are still at a good rate in Dubai. But in some areas, in units that are overpriced, the rates are bound to come down sharply,” he explained.
“In the future it all depends on supply and demand. The market has to balance itself,” he added.