Only a third of people in Dubai believe the emirate’s property market has shown signs of recovery, indicating worse sentiment than last year, according to a survey by Core Savills.
The real estate firm said respondents were less positive that the market was preparing for a turnaround in its report this year (34 per cent) than 2016 (50 per cent).
Of those that disagreed with seeing signs of recovery, 80 per cent believed the market would be over supplied by 2020.
Core Savills said this demonstrated a clear divergence between market reality and perceived sentiment as there was a “40-50 per cent lag in the last five to six years between the number of announced and delivered units”.
“In reality, nearly 15,000-18,000 units are delivered every year, which adds only 3 per cent to 4 per cent to the existing stock– albeit, a moderate number to be absorbed, even in the current market economic condition, and not a cause of extensive concern as perceived by the market,” it added.
The company said this was supported by its other findings that showed 20 per cent of potential buyers below the Dhs1m price point considered a lack of knowledge an important deterrent to their acquisition followed by macro-economic uncertainty and the lack of funds for a downpayment.
In the wider survey, the firm found that 90 per cent of tenants in the emirate chose to stay in their existing unit, with 58 per cent renewing under the same conditions and only 26 per cent seeing a decrease in their rent.
The firm suggested their was room for further softening over the next 12 to 24 months as three quarters of tenants had not seen their rent decrease despite many reports suggesting the current downturn had placed them in a better negotiating position.
“As this effect slowly unfolds, we warn against any future over-interpretations of further rental decrease as most of the recorded figures might turn out to be the statistical effects of a market that continues to self-adjust more widely, rather than further actual rental reductions in amplitude,” said Core Savills CEO David Godchaux.
In terms of investor appetite, off-plan units were found to be more popular with investors than end-users, with 65 per cent of the former considering an acquisition in the below Dhs2m price point compared to 35 per cent of the latter.
This was despite more attractive plans on offer in the market that 64 per cent of respondents said encouraged buyers to favour off-plan over ready properties.
The firm said access to mortgaged remained the biggest deterrent to buyers of property priced below Dhs1m, cited by 65 per cent of respondents considering acquisitions in this category.
However, the number of respondents that believed mortgage regulation should be relaxed actually decreased from 71 per cent last year to 55 per cent in this year’s survey.
Overall, the market was found to be largely price-driven, with budget cited by 80 per cent of respondents as one of their most important criteria and one in two stating it as their most important criteria.
Location was ranked one of the top three most important parameters in their buying decision by 69 per cent of respondents and 24 per cent as the most important factor.
This was followed by reputation in third, which was listed as a top three factor by 54 per cent of respondents and a top factor by 11 per cent and build quality in fourth, cited by 26 per cent and 6.5 per cent.