Dubai residential property suffers oil price slump
Sales prices [YoY] in Dubai dipped by 5%-10% in Q2 2015, driven by weak demand for luxury property, strong US dollar valuations, and sliding oil prices
Prices of residential real estate in Dubai were up to 10% lower during the second quarter of 2015, as compared to figures from the same quarter in 2014.
Sales and rents could further dip in Dubai during the remainder of 2015, even though UAE's property sector "exceeded expectations" in Q2 2015, owing largely to economic diversification in the country.
"Moving forward, Abu Dhabi rents are expected to maintain growth, while Dubai is expected to challenge and eventually overcome price fluctuations," Tasweek Real Estate Development said in a recently released report.
“As we foresaw in the past quarter, the primary markets of Dubai and Abu Dhabi underwent price corrections in Q2  that will most probably result in moderate upward market movements throughout the rest of the year," Masood Al Awar, CEO of Tasweek said.
"With global oil prices sharply declining since mid-2014, real estate economic diversification has taken centre stage as the driver of growth in the UAE and across the region, which will have a positive spillover effect on the real estate business.
"Given the recent market shifts, the next half of 2015 will be an important indicator of how our industry will fare in the short to medium term as the UAE gears up for Expo 2020," Al Awar added.
Tasweek said Abu Dhabi and Dubai markets experienced price corrections specifically for freehold units between April 2015 and June 2015.
Tasweek’s Q2 market research in Abu Dhabi showed that the residential market sustained the Q1 trend of landlords protecting rental levels by reducing supply.
Residential rates fell in Dubai due to weak demand for luxury properties, sliding oil prices, and a stronger US dollar, according to Tasweek.
On an average, sales prices in the emirate decreased by between 5% and 10%, compared to 2014, Arabian Business reported.
Retail and commercial spaces are expected to be more resilient than hospitality in the future, given the sizable supply of hotel rooms expected in anticipation of Dubai Expo 2020, the report continued.