By Andrei Skvarsky.
The United Arab Emirates’ real estate sector did quite well in the first half of 2015 and, in fact, “exceeded all expectations”, the Bayut.com property portal says.
Abu Dhabi showed “sustained growth” in the rental and hospitality sectors while residential and office space sales in the UAE capital did not increase but remained stable, the Dubai-based portal says in a report reviewing the performance of the real estate markets of Abu Dhabi and Dubai for the first six months of the year.
Dubai’s property market slowed down somewhat, but is likely to resume growth in 2016, the report argues.
The reasons for Dubai’s “losing the steam it had amassed over the last two years” included international developments and the Dubai government’s measures to prevent market overheating, according to the report.
But “the strongest factor that remains effective is the market adjusting to shed off the excessive weight of prices it put on over the past few years. The property sale values dropped between 5% and 10% in H1 2015 compared to 2014”, the report says.
Yet despite the general slowdown of Dubai’s property market, rental returns in the city continued to “hold strong, with some areas even registering growth in values”, Bayut says. Overall, Dubai’s rental returns are 5% to 7%, the report says, describing them as some of the world’s best.
Dubai is, moreover, a popular destination for labour migrants. It issued more than 200,000 work permits in the first quarter of 2015 alone.
This plus Dubai’s status as a regional business and financial hub and its popularity as a tourist destination mean that its property market will most likely pick up again before long, according to Bayut, which argues that the turning point is likely to come in 2016.
Dubai has recently brought out new laws to protect investors.
Bayut attributes the success of the UAE real estate sector to the country’s diversified economy and its relatively low dependence on oil.