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There was no significant monthly change in values for apartments and villas in key locations across Dubai, according to the December ValuStrat Price Index (VPI), which monitors the 26 areas in the emirate. VPI registered 97.9 index points, with no significant change in values compared with the previous five months. According to ValuStrat, this marks the first time the residential market has registered no effective monthly change since the current period of correction began after the peak mid-2014.
Compared to a 100-point base in January 2014, the Dubai villa market registered 96.9 points in December last year and the apartment market had 98.6 points, similar to the scores in September, October and November.
Experts believe real estate values will remain under pressure this year, although the property market could benefit from faster legal reforms and greater policy certainty, according to Eric Volkers, Senior Consultant, Research and Consultancy at CBRE Middle East.
“The residential market is expected to remain subdued over the first half of 2016, with weaker demand leading to stabilisation or further declines in sales and leasing rates,” said Volkers. “With around 20,000 units set to enter the market before the end of 2016, landlords could face increasing competition in securing tenants, which could accelerate deflationary effects on the market in the coming quarters.”
According to CBRE, the outlook for economic growth remains seasonable and more stable than before despite weaker oil prices, with the UAE economy expected to expand by around 3 per cent from 2015-16. “The banking sector certainly looks more robust and less exposed than during the last cycle, with the authorities more aware and more proactive to alleviate potential risks,” said Volers.
Abu Dhabi’s real estate market is likewise expected to experience deflation in the short term. “We expect to see a fragmented marketplace, with more pronounced declines to be experienced in secondary locations and for inferior products,” said Volk-ers. “Prime developments in the office and residential sectors are forecast to see steadier performances across rentals and occupancy rates.
“While the hospitality market performance has been steady in recent quarters, there may still be some short-term negative impacts to be felt as a result of declining demand from govern-ment/corporate activity.”
CBRE, however, noted that the slowdown in Abu Dhabi’s commercial market hasn’t manifested in the form of negative ADR or occupancy growth as yet.
Source: Property Weekly