Residential property prices in Dubai fell by an average of 10 per cent last year and could be set for a further dip in 2016, according to a report by consultancy firm Deloitte.
The Real Estate Predictions Report for Dubai said that in 2016, average residential prices will decrease further, “reflecting a transition to a more mature market”.
But at the same time, the report said that the softening in residential rental rates in some sub-markets will not be to the same degree of recent declines in residential sales prices.
It added that in contrast to pipeline forecasts estimate that some 40,000 units will be delivered in 2016, it was likely that around 10,000 units would be generated instead.
Deloitte Corporate Finance Limited managing director Robin Williamson said: “Over the past 13 years Dubai has experienced development on a scale and to a standard like no other real estate market globally. Along with other regional and international markets it has suffered the effects of the global financial crisis.
“Today, it is now maturing and feeling the effects of various market drivers whilst demonstrating strong resilience in certain sectors.”
He added: “Despite the decline in average residential sales prices in Dubai during 2015, price growth over the last four years reflects a compound annual growth rate of 11.6 per cent, which outperforms other leading global cities such as London, Paris and Singapore.”
Deloitte also said office rental growth in Dubai during 2016 will be slow in some sub-markets as a result of supply growth and the power of negotiation will, in general, shift from landlords to tenants.
The report said: “There will be a trend towards more mixed use office led developments and a greater allocation of space to amenities, which will enable schemes to differentiate against competition as well as a strategy for developers to diversify risk and generate more robust cash flows.”