Iranians are likely to become major buyers of Dubai property again if sanctions against the Islamic Republic are lifted, providing a much-needed fillip to the emirate’s real estate sector, consultants Cluttons said.
Dubai property prices have fallen slightly this year, ending a sustained rebound from 2008-9 crash after tougher regulations to deter speculators, a slump in oil prices and weakening confidence in the global economy dampened sentiment.
Property consultants Cluttons estimates residential prices, including both houses and apartments, are 3.1 per cent lower than this time last year, according to its report on Dubai published on Tuesday.
But that could change should a nuclear agreement between Tehran and world powers concluded in July result in the relaxation of several years of sanctions on Iran, Cluttons said.
Local and global businesses previously used Dubai as hub for their Iranian operations, the consultants said, predicting this would again become common practice.
“It is our view that Iranian nationals will seize the opportunity to make significant real estate investments in Dubai,” Cluttons wrote. “This is expected to be amongst the first lead indicators of the benefits to the UAE from the lifting of Iranian trade sanctions.”
In 2010, Iranians were the fourth largest foreign buyers of Dubai property, behind India, Britain and Pakistan, and accounted for 12 per cent of real estate transactions, Cluttons said, citing Dubai government data. This had slumped to 3 per cent as of the first quarter of 2015.
Yet Iran was the United Arab Emirates’ fourth largest trade partner in 2014, despite the sanctions, with the two countries conducting an estimated Dhs 62.4bn ($16.99bn) in cross-border trade, up 8.3 per cent year-on-year, Cluttons wrote, attributing the figures to Tehran.
Dubai house prices fell 5.1 per cent and apartment prices 0.6 per cent in first half of 2015.
“Any weakening in regional demand for Dubai residential assets as a result of continuing oil price declines is expected to be countered to an extent by Iranian funds,” Cluttons said.