Dubai house prices and rents to fall another 10% in 2017 - S&P
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Dubai house prices and rents to fall another 10% in 2017 – S&P

Dubai house prices and rents to fall another 10% in 2017 – S&P

The company said the UAE real estate sector faced another tough year

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House prices and rents are expected to fall up to 10 per cent in Dubai this year, ratings agency Standard & Poor’s has said.

In a report published this week, the company forecast another tough year for the UAE real estate sector, following a correction in 2016 linked to low oil prices and currency woes.

Dubai residential prices dropped by 8-11 per cent in and rents fell by 6 per cent in 2016, S&P said citing figures from

“The strength of the dollar is also making the UAE increasingly expensive for tourists and low oil prices in 2016 have diminished purchasing power and weakened investor sentiment,” the company said.

Among the factors determining S&P’s forecast was the continued weakness of the UK pound – down 17 per cent against the US dollar over the past 12 months.

The company noted that the UK is traditionally among the top three source markets for visitors to Dubai. UK nationals were also the fourth largest investors in residential real estate in the first half of 2016.

“For 2017, we see no signs of market improvement for the UAE real estates sector, despite housing affordability improving from the current price environment. We expect residential prices and rents to fall by another 5-10 per cent in Dubai in 2017,” S&P forecast.

However, the firm said it did not expect any major negative movements in the ratings of the real estate sector over the next year and a half.

Developers are expected to be able to absorb the fall in house prices due to low debt burdens and strong balance sheets.

“Rated real estate companies are also hedged somewhat due to their high asset quality and long-lease structures,” according to the firm.

Reports from real estate consultancies this year have suggested that new supply may also dampen the recovery of the Dubai and Abu Dhabi markets in 2017.

Read: New units to hit Dubai property market recovery in 2017

Asteco said this month that 2,700 apartments and 1,360 villas were scheduled for delivery in Abu Dhabi this year and 31,500 apartments and 12,500 villas in Dubai.

Read: Dubai rental declines, new supply, mean tenants in control in 2017 – Asteco


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