Dubai has dropped to the 27th rank on property consultant Knight Frank’s Prime Global Cities Index, a list that ranks cities on the basis of the performance of their luxury residential properties.
Prime house prices in the emirate fell 1.1 per cent year-on-year in the first quarter of 2015 while showing a 1.9 per quarter-on-quarter decline, the report found.
However, the Middle East region as a whole recorded an increase of 4.6 per cent in Q1 2015 on the index, the report added.
Globally, North American cities topped the index in terms of annual price growth while European luxury homes were the weakest performers.
Overall, the index has climbed 47 per cent since its financial crisis low in the second quarter of 2009.
Eight cities, including London, Dubai and Hong Kong have also outperformed the index over the same period.
“If we were to omit cities in North America and Australia, the index would have recorded growth of 2.3 per cent instead of 3.9 per cent in the year to March 2015,” said Kate Everett- Allen, partner, residential research.
The slowdown in Dubai’s luxury property prices comes after a period of consistent growth. But such a decline is not reflected in the emirate’s luxury residential rents in Dubai, which have grown over the last year.
According to an earlier report by Knight Frank, the emirate ranked second worldwide for prime rental growth in 2014 with luxury residential rents growing by 8.1 per cent. But analysts have said that growth might soften in 2015 due to a variety of factors.
Dubai’s residential rents are expected to remain flat or drop by up to 10 per cent this year, according to real estate consultancy JLL.
A report by Asteco also agreed that the emirate’s rents are poised to soften in 2015 due to additional supply entering the market.