Emirates NBD Dubai Real Estate Tracker July 2015

4 Min | 09 July 2015

Real estate agents indicate a correction in property values over the three months to June, but the rental market continues to strengthen

Dubai, July 9, 2015: This press release contains the second release of data collected from a new survey of the Dubai real estate sector. According to the latest survey, real estate agents in Dubai experienced softer overall property market conditions in June, with just over half (52%) reporting a drop in average sold prices while less than one-in-four (23%) noted a rise in property values over the past three months.

New buyer enquiries also decreased during the latest survey period, driven in part by an expected slowdown ahead of Ramadan, but some real estate agents also cited reduced risk appetite among investors and more subdued underlying international demand than earlier in 2015.

The survey, sponsored by Emirates NBD and produced by Markit, contains original data compiled from a representative panel of Dubai real estate agents, alongside original survey data collected from a representative sample of households living in Dubai.

Commenting on the Emirates NBD Real Estate Tracker, Khatija Haque, Head of MENA Research at Emirates NBD, said:

"The findings of the latest Emirates NBD Dubai Real Estate Tracker survey are consistent with weaker sales price data that we have seen in Q2 2015. As the Real Estate Tracker is not seasonally adjusted, slower activity as we head into the summer holidays was to be expected. However, the underlying data suggests that the market is more evenly balanced than the headline indices suggest, and all indicators for the rental sector suggest that the population dynamics remain supportive of the real estate market in Dubai."

Key Findings:

Real estate agents indicate that average sold prices declined through Q2 2015
New lettings continued to increase sharply in Dubai, reflecting strong rental demand
Households’ expectations of rising property values contrasted with cautious outlook among agents

While real estate agents pointed to a downward correction in property prices over the three months to June, households in Dubai remained highly upbeat about both their current and future property values. Around two-thirds of Dubai households (66%) anticipate a rise in their property value over the next 12 months, compared with just 17% that anticipate a reduction.

On the rentals side of the market, both real estate agents and households in Dubai reported higher average prices over the three months to June. Moreover, real estate agents pointed to robust increases in letting activity (50% indicated an upturn and just under 14% suggested a fall) and a sharp increase in new rental enquiries, especially for apartments.

Sold prices, new buyer enquiries and price expectations
More than twice as many Dubai real estate agents (52%) reported a drop in property values as those that noted a rise during the three months to June (23%). As a result, the headline Emirates NBD Dubai Average Sold Prices Index registered 35.4 in June, down from 52.0 in April and below the neutral 50.0 threshold. Moreover, the index signalled that falling sold prices in June contrasted with a modest increase over the three months to April. By property type, the index measuring sold prices for villas (32.6) was lower than that for apartments in Dubai (35.9).

Anecdotal evidence suggested that softer investment sentiment and more subdued underlying market conditions had contributed to a drop in overall property prices in June. Mirroring the trend for overall new buyer enquiries, latest data also pointed to a fall in international new buyer enquiries (41% of agents saw a decline, and only 27% reported a rise). Looking ahead, just over half (52%) of Dubai real estate agents expect a fall in property values over the next 12 months, while only 30% foresee a rise. This contrasted with positive sentiment for year-ahead property values among Dubai households.

New lettings activity and rental prices
While real estate agents indicated a price correction for Dubai property values over the three months to June, the latest survey pointed to a robust and accelerated upturn in rental demand. More than half (51%) noted an upturn in apartment lettings against only 13% that experienced a fall. Exactly 41% signalled an upturn in villa lettings, while only 18% suggested a reduction. In terms of new rental enquiries, latest data indicated that demand for apartments continued to rise more quickly than for villas.

Looking ahead, real estate agents (on balance) anticipate a moderate fall in average rental prices over the next three months. However, among households with a rent renewal in the next three months, more than half (58%) expect a rise in their rental price and only 15% foresee a reduction.

Dubai Real Estate Agents: Average Sold Prices (vs. three months ago)