• Apartment transaction volumes down 1.5 per cent so far this year
  • Dubai property market still subdued

Apartment transaction volumes are down 1.5 per cent, according to a mid-quarter research note published in June by Dubai-based real estate firm Phidar Advisory.

The research note goes on to state that, over the next five years, price trends will be subject to varying supply estimates. “When only considering projects currently under construction and launched, the supply-demand dynamics are manageable. However, in the base case scenario, assuming an average GDP growth of 3.4 per cent and residential demand CAGR [compound annual growth rate] of 4.6 per cent, if all of the announced projects are completed, the market could achieve a 7 per cent oversupply in 5 years,” the report says.

Further to this, if some stalled projects restart, the projected oversupply will increase.

According to the report, “even a more bullish scenario of 4.1 per cent average GDP growth rate cannot absorb all potential supply expansion, including under construction, launched, announced and stalled projects.”

In addition to this, with regulations showing no signs of being eased, investors will continue to be forced to seek the lower end of the market. As the developments currently under way are out of step with this demand, an oversupply of luxury units will carry on flooding the city.

The outlook for hydrocarbons prices remains uncertain with many oil majors already cutting jobs and capital spending, while a currency linked with the strengthening dollar continues to make the city a much more expensive place to live, work and invest in.

Analysts have said it is difficult to project when growth will return to the market, with weak oil prices, foreign currency fluctuations and supply and demand economics proving to be longer-term issues.

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