Dubai real estate prices update.

What was the first quarter of 2016 like for Dubai real estate prices? As per latest market research, after falling a little over 3 percent in 2015, real estate prices dropped by another 2.2 percent between January and April 2016. In the villas and apartments market, experts say that this marks the strongest quarterly decrease in values of Dubai properties in five years. Two key factors likely to remain headwinds for Dubai real estate this year are low oil prices and a strong US dollar-pegged local currency, which makes Dubai properties more expensive for international investors.

Those who have been carefully monitoring the softening of Dubai real estate prices say that values are set to fall further even as the local economy adjusts to global conditions, eroding the overall demand and prices. For instance, villa prices have been reported to be close to 7 percent down during this time compared to 2015, with experts adding that a further decline of around 5 percent is anticipated over the course of this year. However, Dubai real estate prices particularly apartments, seemed to show greater resilience during the first quarter of this year, with only marginal declines across the emirate and a dip of 3-4 percent anticipated this year as transactional activity slows down.

While this may be the situation with demand for Dubai properties, data is showing that the supply of Dubai properties has also slowed down, with no major shift in forecasts expected until 2019. This year, around 7,000 units are expected to be completed, followed by a further 10,299 deliveries in 2017. In 2018, the number of handovers is expected to rise to 16,026, indicating that while there is supply, there will not be an oversupply. Moreover, the easing of Dubai real estate prices is likely to continue, even as the market evidently works its way through a tough period, only to emerge more resilient in the coming years.

Interestingly, real estate data is showing that Dubai’s rental market remains more resilient than the sales sector, with less sharp declines in real estate prices demonstrated during 2015. Across Dubai’s freehold residential areas, prices declined by an average of 1.3 percent while the first quarter of 2016 registered a further 2.7 percent dip. This tempered rental environment is good news for tenants across the emirate, in an otherwise challenging time for the Dubai real estate market.