Strong dollar, interest rate rises to impact UAE property market in 2017 - Gulf Business
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Strong dollar, interest rate rises to impact UAE property market in 2017

Strong dollar, interest rate rises to impact UAE property market in 2017

The stronger dollar makes the UAE less attractive for local and foreign buyers, says

The strong dollar and US Federal Reserve interest rate rises will likely impact the UAE’s property market this year, according to listings website

The warning comes following a report released by real estate consultancy CBRE yesterday stating that a significant pipeline of new units could dampen the recovery of the Dubai market in 2017.

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

Propertyfinder said the dirham’s link to the dollar was good for expats sending currency home but made property more expensive for foreign investors and could drive up borrowing costs for residents.

“A stronger dollar makes UAE property more expensive and less attractive for both locals and non-locals alike,” said group CCO Lukman Hajje.

“We’ve seen clear evidence on of UAE property prices declining as the dollar has strengthened. We saw this in the second half of 2016 in the Brexit aftermath as British and European expats shifted their attentions back to their home markets which suddenly became more attractive, in many cases liquidating UAE property assets to take advantage of favourable currency exchange.”

Read: Short-term impact of Brexit hits Dubai property market

In its 2016 report, CBRE said residential property values fell an average of 5 per cent annually last year, dropping 4.6 per cent and 6.5 per cent for apartment and villas respectively.

Hajje said he expected price decreases to continue in 2017 in turn stimulating sales activity.

The US Federal Reserve expects to make three interest rate rises this year, doubling current rates as President Donald Trump takes office.

The UAE is expected to follow suit as it did following the rate increase last month.

UAE, Saudi Arabia, Bahrain and Kuwait raise interest rates after US Federal Reserve decision

Hajj said this meant more expense for UAE residents hoping to get on the property ladder, with expats already required to pay a minimum 25 per cent deposit plus up to 7 per cent fees on their first property.

“This takes a big chunk of potential buyers out of play, particularly those living and working in the UAE who’d like to get out of the endless rent spiral but just can’t afford to,” he added.


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