Dubai now has a "two-speed property market", where house prices are falling even as rents remain stable, according to analysts at Emirates NBD.
“Property sales are weaker, but the rental market is firm or firmer than we have seen previously,” said Tim Fox, the chief economist at the Dubai-based bank.
Interest from local and international customers, and average sales prices, were sharply down last month, according to data from the bank’s monthly real estate tracker, a survey that gauges market expectations in Dubai.
That is in line with private estimates showing a cooling of Dubai’s property market.
Property prices fell by 2 per cent in the two months to August, according to the real estate consultancy CBRE, while Reidin, a property data company, said that prices had fallen by 3 per cent in the three months to the end of August. HSBC said that property prices had fallen by about 9 per cent in the year to August.
That has followed Central Bank-mandated caps on the amount of mortgage debt consumers can take on, and a stronger dollar that has made selling Dubai property prices more expensive to foreign buyers.
The overall picture on Dubai rents is uncertain, with analysts pointing to movements in different directions. Sixty eight per cent of tenants interviewed for Emirates NBD's real estate tracker said their rents increased last month, even though growth in lettings slowed over the month. But data from CBRE showed rents remaining flat in the two months to August, and Reidin figures showed a decline in rents.
The bank’s monthly tracker for Dubai’s economy recorded a score of 57.6 per cent in August, up from July’s score of 53.1. That suggests a quickening in the pace of economic growth. Any score above 50 indicates that a majority of interviewed participants have had more business.
Economic data suggests that despite the decline in the oil price to US$42 per barrel in August, the UAE economy has not yet felt much economic pain. Purchasing managers index data, which has historically been a reliable indicator of the economic growth rate, suggests that the country’s economy has continued to record decent growth over the past nine months – with the exception of a slowdown during Ramadan.
“The pace of growth in Dubai has been robust, although a little bit slower than in 2014,” said Mr Fox.
“The overall message is a positive one – it illustrates that what we saw as a slowdown in June and July was probably due to temporary factors [Ramadan], and growth has resumed in August on a positive and more stable footing.”
abouyamourn@thenational.ae
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