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It may be too early to call time on the decline in Dubai's realty prices, according to a new report by Phidar Advisory. Instead, it says, there will be further declines in occupier demand and which would force further drops in property values.
''The available real-time indicators do not support the story of a short-term turnaround'' said Jesse Downs, Managing Director. ''And ignoring the bad news now can create a crisis later.
According to Phidar, during Q1-16, apartment lease rates were down 2.1 per cent, while sales values dipped 1.9 per cent, ''keeping yields relatively steady at 7.7 per cent [gross] and 6.6 per cent [net].
''The strong dollar, low oil price, rising cost of debt all reduce liquidity and consumption'' said Downs. ''This has filtered through the economy and is now impacting job growth, occupier demand, and rents.''
The rental pressures continue to be felt most at the high-end, ''more specifically for apartments and single-family homes with an asking rent above Dh200,000 per annum. Anecdotal evidence indicates this trend may be spilling over into the mid-high income housing market with longer void periods for housing with rents above Dh100,000 per annum.
''The implication is that affordability constraints, or at least concerns, have shifted demand away from expensive units. The bigger concern is the drag effect this will have on other middle and mid-high income units.''
Source: Staff report