Prices forecast to fall 10-20%

23.06.2015
S&P cited forecasts from property analysts REIDIN that 20,170 new units would be delivered in 2015, nearly double the annual average of 11,600 over the preceding three years.

Dubai residential property prices are likely to fall 10 to 20% this year because of subdued demand, slower economic activity and downbeat investor sentiment, credit rating agency Standard & Poor's said on Monday.

"Slightly lesser demand will come from non-residents," S&P said in a statement. "In early 2015, non-resident demand from Russia and other member countries of the Gulf Cooperation Council was particularly subdued."

S&P expects oil prices to remain weak through to the end of 2016 so that economic growth in the United Arab Emirates as a whole "is likely to slow markedly in 2015 and 2016," according to Reuters.

The agency also warned that a fall in Dubai's stock index would be likely to affect investor views on property. The index is down 10% over the past 12 months, according to Reuters' calculations.

That drop reflects doubts about the sustainability of current property prices, S&P said. "General investor sentiment is key in Dubai real estate because a large majority of buyers are investors."

Greater supply of new residential units will also dampen prices. S&P cited forecasts from property analysts REIDIN that 20,170 new units would be delivered in 2015, nearly double the annual average of 11,600 over the preceding three years.

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