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February 14 | 2016 | 14:40 | Dubai
While 2016 may be a challenging year for Dubai’s residential real estate in the short term due to a number of internal and external factors, the market should see an upturn in 2017, says KPMG’s “Building Confidence” report – a review of Dubai’s residential real estate market. The statistics from Dubai Land Department report a decline in the number of residential units sold between January 2014 and November 2015. While certain areas have been more impacted than others in terms of declining prices for residential real estate, the overall magnitude of the decline has been tempered. KPMG suggests that this is a result of vastly improved regulations within Dubai’s real estate sector. Affordable housing areas have incurred lower declines and, in some cases, even maintained value or rental yield.
Sidharth Mehta, Partner and Head of Building, Construction and Real Estate with KPMG Lower Gulf, commented, “While oil prices remain well below the long term average, which is clearly having an effect on market confidence,Dubai’s improved regulatory environment, broader investor profile, and increased maturity are all indicators that its real estate market should eventually self-correct.”
The report indicates five key trends that will drive the Dubai residential real estate market in 2016 and beyond:
(1) Liquidity is likely to become increasingly important as markets continue to tighten.
(2) A second important trend relates to the oil price, which seems unlikely to recover in the short term.
(3) As supply and demand are not currently balanced, certain areas and segments are significantly more attractive than others – with a premium for quality.
(4) There is also going to be a drive towards affordable housing, with increasing amounts of housing coming onto the market at prices that both compete with the rental market but also – and probably more importantly – appeal to a much wider demographic.
(5) And, finally, Expo 2020 is likely to have both a direct and indirect impact on the real estate market – and is increasingly on the horizon for both the private and the public sector.