The residential property market in Dubai has remained quiet for the second consecutive quarter. Worse, experts are warning that the sector may face a further slowdown due to the eurozone crisis and weak economic outlook in the US.
The latest report from CBRE shows 1,459 residential transactions for the third quarter of the year, compared to 2,649 transactions during the third quarter of 2010.
Although outlook for the global economy may be slightly uncertain, the International Monetary Fund recently revised economic growth figures for the United Arab Emirates upwards to 3.8% for this year, compared to 3.3% earlier on in 2011 and it feels the Emirates is continuing to stage a modest recovery.
This is good news, but the latest HSBC report is slightly conflicting as it suggests private sector activity is beginning to slow. However it also points out this will have little effect on economic expansion for this year. Also, that the opening of the new Metro Green Line two months ago could have the effect of stabilising rents and increasing occupancy rates in some of the most densely populated areas in the emirate.
Lease rates for villas and apartments have only declined slightly during the last quarter, dropping 1% compared to the previous quarter, but the year-on-year fall is about 19%.
Villas are proving to be more popular than apartments as supply remains limited and demand remains high, especially for luxury properties. Even so lease rates have dropped by around 10% year-on-year, but this is half the rate of decline seen for apartments during the same period.