Core UAE: Dubai property market reaching maturity
Dubai’s real estate market will reach maturity in the run-up to Expo 2020, according to David Godchaux, CEO of Core UAE
Dubai’s real estate market is likely to reach maturity in the lead-up to Expo 2020, according to David Godchaux, chief executive officer of Core, UAE associate of Savills.
Speaking ahead of Cityscape Global 2016, which will take place in Dubai from 6-8 September, Godchaux predicted an end to the boom and bust nature of the emirate's pre-crisis real estate market.
He also stated that property prices in Dubai are likely to witness upward pressure during the next three-to-six months, owing to underlying demand from investors ready to re-enter the market.
In comments made during an interview with the organisers of Cityscape Global, Godchaux explained: “When you look at what has happened over the past two-to-three years, we’ve seen a lot of softening in residential and commercial prices in Dubai.
“Everyone is now looking at the market expecting it to bottom anytime soon. We have a lot of clients who believe that the market has actually bottomed, and they are forming a kind of underlying demand ready to re-enter to try and seize prices at the best possible time.
“So you have this underlying demand that is ready to re-enter, and we expect this upward pressure on prices to take effect over the next three-to-six months, driving prices up until [Expo 2020],” he said.
Godchaux argued that although double-digit growth is probably a thing of the past, the result will be a lower-risk real estate market in Dubai.
“We used to have double-digit growth for many years in Dubai,” he noted. “The market was booming [and] emerging; lots of projects [were] announced. We don’t see that moving forward.
“You will still have a lot of projects announced, but the market has reached a certain level of maturity that it didn’t have before. We have much more depth in the market; many more transactions [and] many more players.
“What this means, for good and for bad, is that prices [will not] crash as fast as they have done in the past. We’ve seen prices softening – not crashing – in the past two years. [Conversely,] during the upturns, prices [will not] grow by 10%, 15%, [or] 20% per year, as we’ve also seen in the past,” Godchaux explained.
Core UAE’s CEO added that increased market stability is likely to boost confidence among international investors considering property in Dubai.
“We’ve seen this [sector] growing progressively, giving more confidence to long-term investors that the market is more stable, more mature,” said Godchaux. “We’re seeing more long-term players, rather than speculators, coming back to this market with the confidence that the market is more solid and equipped as a global city.
“What will happen, probably over the next three-to-four years, [is that] a lot of people [will look] toward [Expo 2020]. I don’t believe that the expo, just by itself, will drive a lot of real estate price growth. That certainly creates jobs, but more important is the market sentiment; that something is happening, people are looking at […] a generally healthy economy, and at a market that has matured.
“It’s more about confidence that something is happening,” Godchaux concluded.