Dubai – Mubasher: The residential property market in Dubai has slowed down in 2017, as property prices tumbled on the back of oversupply, National Bank of Kuwait (NBK) said in a report on Sunday.
Prices of apartments and villas dropped 7.8% and 5.6% year-on-year, respectively, in the fourth quarter of 2017, property firm Asteco’s data showed.
Other data and indices confirmed these results, as Reidin index for properties revealed that the prices of apartments and villas in Dubai had declined 1.9% and 3.5%, respectively, in Q4-17, NBK’s report found.
Leases were down too, decreasing by 11.1% year-on-year for apartments and by 9.6% year-on-year for villas in the three-month period ended 30 December, Asteco reported.
Dubai's real estate sector has faced a slew of challenges during the last decade, as prices nearly halved after the world’s financial crisis and then recovered, pushed up by the rapid increase of oil prices, NBK stated.
After Dubai was awarded the host of Expo 2020 in Q4-13, the prices of apartments and villas in the emirate surged 60% and 35% year-on-year, respectively.
To stabilise property prices, “the authorities doubled the land registration fees to 4% and introduced tighter loan-to-value ratios to help mitigate risks to banks’ balance sheets, rein in speculative activity, and gear the market more towards end-buyers”, the Kuwait-based bank commented.
As a result of these tightening measures, apartment prices’ growth slowed down to 19% in the second half of 2014 from 41% the first six months of the same year, while villa prices’ growth fell to 8% from 20% during the same period.
These tightened measures along with the increase in fuel prices and the sluggish growth of salaries slowed down the demand on properties, the report revealed.
Abu Dhabi has been affected by the declining trend as well, where the prices of apartments and villas levelled down 8% and 7.9%, respectively, in Q4-17.
The NBK’s report reiterated that the oversupply of housing properties was expected to continue in 2018, adding 17,000 apartments in the property market.
“Although project launches are expected to ease off in the H2-18, the projected supply increase in 2019, at 8%, is nearly as large,” the NBK concluded.
