Dubai’s property market is facing a slowdown but will not see price drops similar to 2008 and 2009, a senior developer has said.
According to reports, the emirate’s property market saw price reductions of between 10 to 15 per cent in 2015. Experts predict a further slump this year as low oil prices and slowing economic growth weigh on the market.
However, speaking on the sidelines of a property launch, the chairman of real estate developer Sobha PNC Menon asserted that the market was resilient.
“It is not like 2008, when we went through a global recession. It is completely different now. For us, I will say the market is slow, but it’s only 40 per cent down – 60 per cent [of buyers] are still there,” he said.
“There is a slowdown but we are still selling and we have not reduced prices so far. If and when prices drop, it’s still not going to be like 2008. It may be a maximum of 10 to 15 per cent that it can go down.
“Even then it is a commercial decision taken by the builder, not by the market. The developer – depending on his capability to sell and urgency for money – will be driven to reduce prices,” he added.
Prices in Dubai’s property market plummeted by around 60 per cent after the 2008 global financial crisis. Along with the drop in demand, the crash was blamed on increased speculation and oversupply in the market.
However, the Dubai government introduced several new regulations to better control the industry and developers say the market has tilted towards end-users.
“The property business is driven by certain sentiments. So long as the fundamentals are good – of the developer and the city – there is no problem. And I believe Dubai is the best city fundamentally across the three geographies of the Middle East, Africa and the Indian subcontinent,” said Menon.
He also dismissed fears that depressed oil prices – which hit 12-year-lows this year – will have a major impact on the market.
“The sentiment worldwide and especially in the Middle East is low because of oil prices. But you have monsters on our side – India, Pakistan, Sri Lanka, Bangladesh – all doing very well. Africa on the other side is also doing very well. Investors from these countries come and buy in Dubai – this is an international city,” he explained.
However Menon did admit that the market could see a drop in buyers from Saudi Arabia and other regional countries.
“It’s a cyclical business; we have to go through the process,” he added.