Is the Dubai property market falling apart or finding a level?

Dubai is recovering day by day. There are new buildings coming out.
I think we have not seen the bottom in real estate in Dubai

 

The Dubai real estate market is becoming more mature and as such will be more impacted by worldwide economic conditions. Is it really any surprise to see a softening in prices and rental income? Personally I believe those who are writing off the Dubai property market will live to regret this in the longer term.

 

The Dubai property market is more stable today than it ever has been. There is nothing wrong in property prices moving with both the local economy and the worldwide economy. The days of defying gravity have long gone for the Dubai property market although hopefully there will be potential for significant long-term capital appreciation and rental income.

 

The prices seem to be dropping according to most research firms and experts, but it is expected to bottom out by the end of 2016 and start increasing in 2017.

 

This has the feel of a slow deflating of what could have turned into a nasty property price bubble. I don’t see any problem with property price corrections as long as there is no build up of momentum on the downside.

 

The rent prices are not matching the sale prices in terms of downward trend, which makes the ROI even more attractive, for some properties it could be > 10%

 

Hi @Dubai2020 are these rents sustainable in your view? If so then it seems to be something of a no-brainer to begin picking up high yielding properties for the longer term?

 

HI @PostBrexitInvestor,

It appears by all accounts that there will be some fluctuation on the rental returns on property, however not drastic. There have been claims that rental prices will fall, and in some areas they have but only by a little, in the other areas they have just stopped increasing, which for a Dubai resident is nearly as good.

The developers are now starting to put together "more affordable" housing and making promises of guaranteed ROI percentages which to an investor can be quite attractive. The best areas for ROI are Sports City, Jumeirah Village Circle and Al Furjan to name a few (roughly 8-10%).

 

Perhaps it is time to start building up real estate exposure in Dubai, especially if rental income is holding up and rental yields continue to rise as prices fall.

 

Hi John,

The ROI is debatable, if the expected rent for example is 50k and the property is sold for 500k they will advertise guaranteed ROI of 10% but you need to factor in the yearly maintenance fees, which could come for example to be 12.5k, so after deducting it from your income rent of 50k, the ROI actually comes down to 7.5%.

It is still a good ROI compared to worldwide rates, but it is inflated by developers.

 

Hi PostBrecitInvestor, it is a difficult question to answer, but if anything rent rates do not usually fall as hard as property prices. So going with buy-to-let as a long term investment is a sound choice.

 

Could we see some foreign investors channelling their funds to the UK property market, as opposed to areas such as Dubai, due to the recent collapse in the sterling exchange rate? The UK has a sound and strong property market and after the recent currency collapse surely it must look attractive to overseas investors on a long-term basis?

 

I believe the full effect of Brexit will be reflected after 2 years, only then would we see a steady stream of investors since the currency value could drop further within those 2 years.

 

It seems inconceivable that the UK will not be involved in the European single market in some shape or form after leaving the EU. Let us not forget that Europe exports far more to the UK than the UK exports to European markets. Surely they will need to find some common ground and a solution which suits everybody?