Dubai property prices and rentals are on a decline and are predictions of a continued downtrend at a slower rate are being made. The reasons for the softening are many and we can’t only blame the oversupply. Residential developers are offering discounts and incentives like never before and flexible, post handover payment plans that run years after possession are already a trend. While this is helping developers acquire new investors and first time buyers but aren’t we portraying a distressed market?
All the current stats point towards no sharp increase in property and rental prices anytime soon, but there is an underlying shift happening in the real estate market dynamics that indicate its 5:30 on the property clock.
This has been the theme of the real estate market across all sectors in the last quarter of this year and we see the focus shifting to smaller unit size therefore reducing the overall ticket price of the property. Developers slowly succumbed to the requirement and the much awaited need to build properties for the mid-income earners living within the country. Looking at the future and as we get closer to the EXPO 2020, the majority of the new entrants to the country will be within the mid earning scale. This positive shift will bring gains to the property market in the long term contributing majorly to absorption of new inventory even after the EXPO 2020 is over.
The new “Property Mortgage Law” in the news is a welcoming move and when Implemented will help more end-users to come into the property scene. We have seen the success of the mortgage cap in helping cool down the overheating market when it was applied a few years ago. Now would be the right time to reverse and increase the mortgage cap allowing higher LTV’s beneficial to end-users and property investors. The new law will also enable non residents wanting to buy property in Dubai on a mortgage but are reluctant to pay the 35 to 40 percent down payment, opening new avenues of capital flow into the real estate market. This will definitely help demand go full throttle combined with the current low prices and help the absorption of excess inventory ushering the market towards more balanced indicators.