Dubai’s tighter property rules aimed at preventing a housing bubble are the main cause of a slowdown in the emirate’s real estate sector rather than a sustained drop in oil prices, industry experts said.
Dubai has a low reliance on oil despite hydrocarbons providing three-quarters of the United Arab Emirates’ consolidated revenue in 2014, according to credit agency Moody’s. Abu Dhabi is home to the bulk of the UAE’s energy reserves.
“Dubai residential property sales have declined over the past three quarters, but the drop in oil prices is coincidental and the slowdown is more due to big price increases in 2013 – the market is adjusting to return to affordable levels,” said Nicholas Maclean, managing director of consultants CBRE Middle East.
“This is a positive trend and will help prevent a bigger correction in the future.”
While housing prices are expected to drift lower this year, some experts said well-balanced supply and demand for properties should keep prices stable.
Rival consultancy Cluttons estimates house prices in Dubai rose 51 per cent during 2013 before growth slowed to 3.4 per cent in 2014. This rebound followed a near-50 per cent drop in prices from 2008 as the global financial crisis and Dubai’s debt troubles sparked a real estate crash.