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Dubai | May 15, 2016 | 11:05
The UAE property market is highly sentiment driven. Historically, price movements both up and down can be quite extreme compared to more mature markets with prices. Property prices across most parts of the country have fallen 20-40% in the past 18-24 months. Qualified buyers have been watching carefully, as correctly timing the bottom of the market can mean the difference of a few hundred thousand dirhams on a mid-range two-bedroom apartment, and of course a lot more at the top end. But how can one know when we’ve hit the bottom? As property prices are driven by buyer demand, analysing changes in the level of sales enquiries on the country’s most heavily visited property site is undoubtedly a good starting point with trends on propertyfinder.ae showing a noticeable shift in recent weeks.
2016 got off to a shaky start, with markets around the world tumbling and oil hitting a 14-year low, damaging sentiment and the revenue outlook for GCC oil reliant economies. ‘’Uncertainty reigned and 75% of enquiries sent by users of propertyfinder.ae were for properties for rent, meaning just 25% were sale enquiries,’’ commented CCO Lukman Hajje, propertyfinder.ae. ‘’It’s perfectly normal that the level of rental enquiries be greater than purchase enquiries, as of course not everyone has the ability to purchase. However, when the sales market is strong and property prices are increasing, enquiries from those looking to buy can represent up to 40% of total enquiries.’’ Hajje added ‘’2015 was not considered a strong sales market as prices fell consistently; just 28% of total enquiries made on propertyfinder.ae were for properties advertised for sale. Not since 2009/2010 when prices dropped by 50%-60% and banks stopped lending, has the rent/buy ratio been so heavily weighted towards rent. A 75/25 split in January this year was a clear reflection of the weakness of the sale market.
The property portal reported that February and March 2016 saw a noticeable increase in buyer interest. Buyers represented 29% of total enquiries to their site. In April, this increased further to 31% and has continued to increase. For the first half of May, buyer enquiries represented over 32% of total enquiries. ‘’This is a significant shift from January and is the highest level of buyer interest we’ve seen since mid-2014,’’ stated Hajje. So, does this mean that we are now at the bottom of the market? Will prices continue to fall or are we at the beginning of another upward cycle? ‘’It’s still too soon to be certain. It’s definitely a strong buyer’s market and most sellers are negotiable on their price. But that could change quickly.’’ concluded propertyfinder CCO.