Dubai property headed for an upturn, forecasts Knight Frank
Knight Frank has become the latest broker to call the bottom of the Dubai market, saying that it expects house prices and rents in the city to start to increase from mid-2017 onwards.
In its 2016 Year End Review, Knight Frank said that government commitments to spending on infrastructure and facilities ahead of Expo 2020 would lead to a "potential uptick in sales prices and rents from mid 2017 onwards".
The property broker said that sales prices in Dubai had remained flat on a monthly basis since August 2016, leading it to believe that "the residential market is reaching its cyclical trough".
Knight Frank said that average sales prices in the mainstream market fell 5 per cent in 2016, a slower rate than the 7 per cent dip in 2015.
And in the prime residential market house prices fell by an average of 4 per cent in 2016 versus 5 per cent in 2015.
Knight Frank is the latest broker to predict a revival in the Dubai market after two years of house price falls caused by the global slump in oil prices, the strong US dollar and an increase in transaction fees.
At the end of last year, property broker Core Savills said that it had already noted an increase in sale prices in some of Dubai’s lower to mid-market submarkets.
Although prices in prime areas such as Downtown Dubai, Dubai Marina and Palm Jumeirah continue to edge lower, average sales prices in areas such as Dubai Silicon Oasis, Dubai Sports City, International City and Discovery Gardens had risen by 3 to 5 per cent from their lowest levels at the start of 2016, Core Savills said.
In November, property broker JLL and website dubizzle predicted that Dubai house prices will start to rise in 2017.
However, other property experts remain far more pessimistic.
Last month property research company Phidar Advisory predicted that prices in Dubai would continue along a trend of "further gradual softening" as the market remains subdued by the strong US dollar, an expected increase in interest rates and slow economic growth.
Cluttons also said that it does not expect a recovery in Dubai’s property market until the end of 2017.
"While Dubai’s economy is still diversified, it’s the senior-level jobs that have been lost," said Faisal Durrani, the head of research at Cluttons. "Also, the rate of [job] replacement and creation has slowed down."
In Abu Dhabi, Knight Frank said that it expected sales prices and rents to fall in 2017 as the capital’s property market continues to suffer from cost cutting and corporate restructuring resulting from low oil prices.
It said that both rents and house prices in the capital had remained flat in 2016.
( courtesy of TheNational )