This was the year when the long decline of oil prices took a bite out of the country’s property market. Brokers have yet to come up with final figures for the year but all agree that prices and rents fell significantly in 2016 in Dubai, Abu Dhabi and the Northern Emirates.
Oil prices, which had climbed to historic levels of more than US$100 a barrel in 2011, 2012 and 2013, plummeted in the second half of 2014 and fell again in the second half of 2015. By the start of this year, the price of Brent crude had sunk to $28.94 a barrel, roughly a quarter of its level of a year and a half earlier.
Reidin, the property data company that is referenced by many brokers including JLL and CBRE, said that average house prices in Dubai fell by 12 per cent in the two years to the end of October and rents dipped by about 8 per cent. In Abu Dhabi, it said that prices fell by 3 per cent over the same period and rents are down by 4 per cent.
At the start of 2016 most brokers had been predicting that after two years of falls brought about by the strong dollar and a raft of new cooling measures imposed by the Dubai Land Department, house prices in Dubai would start to recover by the middle of the year.
The news prompted JLL to hurriedly revise its forecasts, delaying its expectations for recovery until at least the end of 2016. “Provided there are no major external shocks over the rest of the year, we expect the Dubai residential market to recover in early 2017,” JLL said in a note in July.
Most brokers now say that they expect a recovery to occur some time in 2017.
Optimists point to an expected increase in Dubai government infrastructure spending next year ahead of Expo 2020, which is likely to boost jobs and the fact that oil prices are already up by about 20 per cent after a global deal to reduce output last month.
Core Savills says that it had already seen an increase in sale prices in some of Dubai’s lower to midmarket submarkets.
JLL says that it thinks the Dubai market is “close to the bottom of its current cycle” and that prices are likely to go up next year.
Cluttons says that it does not expect a recovery in Dubai’s property market until the end of 2017.
And Jesse Downs, the managing director of Phidar Advisory is even more pessimistic, predicting that prices in Dubai will continue to fall throughout next year as a trend towards automation leads financial institutions in Dubai continue to shed jobs.