Dubai housing markets have peaked, says JLL report
Hotel sector also shows signs of slowing growth as number of completed properties set to increase; infrastructure spending cut is a blow to new developments
Dubai's residential market is showing signs of having peaked after rapid price growth tailed off towards the end of 2014, according to a new report.
The study, by property consultancy JLL, suggests the buoyant hotels market is also showing signs of peaking in value terms as a raft of new inventory is set to come onto the market in the run-up to Dubai's Expo 2020 year.
It pointed out that although Dubai's budget forecasted a 9% increase in spending, investment in infrastructure would be cut back by 15%, which is a blow to those building new projects.
JLL MENA's head of research, Craig Plumb, said: “Dubai’s real estate sector ended the year on a quiet note as nearly all segments of the market witnessed subdued growth levels in Q4. Average prices and rentals in the residential sector appear to have stabilized over recent months, with some locations registering marginal declines."
Dubai Land Department figures also stated that the number of house price transactions fell by 30% in 2014, and the value of deals dropped by 14%.
The market is likely to remain subdued throughout 2015 as 25,000 new units are completed, bringing the total supply to just over 400,000 units by year end.
"Growth in the retail and hospitality market was restrained following a period of uncertainty due to oil price fluctuations and a decline in tourist and resident purchasing powers," Plumb added.
Some 4000 new hotel rooms were added to Dubai's total stock, bringing the total to 64,200. A futher 21,100 units are expected to be added to the market over the next three years.