Home prices in Dubai are set to decline next year as buyers from Russia, Europe and Asia exit the market and fewer secondhand properties are sold, according to Arqaam Capital.
House values dropped 4 percent in the third quarter compared with the previous three months and apartment prices fell by 1 percent, analysts Mohammad Kamal and Mohamad Haidar wrote in a report today. Rents dropped 2 percent and 3 percent respectively for apartments and villas during the quarter.
Foreign buyers have become less dominant in the used-home market since the end of the first half, giving way to locals and expatriates living in Dubai who are more likely to resist rising prices, according to the report. Dubai home prices increased by 35 percent last year.
“The relative price insensitivity of the marginal foreign buyer has contributed to the substantial rise in average agreed prices,” the analysts wrote.
The number of used-home sales dropped 30 percent in the third quarter from a year earlier, according to the report.
Developers are expected to see a “strong uptake” of mid-range homes, currently on offer for 1,000 dirhams to 1,500 dirhams ($272 to $408) a square foot, over the next five years. That’s 35 percent below peak prices, the analysts wrote.