According to a poll of property market experts by Reuters, house prices in Dubai are expected to decline sharply this year, and the next, as a slowdown in the economy and an oversupply of housing units add to the concerns of an already gloomy market.
The Reuters report said that Dubai has been seeing a slowdown in its real estate market for the last five years and the downward trend is likely to continue. As one of the seven emirates of the UAE, the city has a diversified trade and tourism economy with real-estate contributing largely to its GDP (gross domestic product).
The Reuters poll of market analysts at 11 investment firms and research institutions between 14 August and 3 September showed that prices of houses in Dubai would fall 10 percent this year and 5 percent in the next year. A 3.3 percent fall is projected for the year 2021.
These views are reflective of the worries of a global growth slowdown amid US-China trade war that has shown similar Reuters polls of housing market activity in the US, Canada and India.
Last year, Dubai's economy grew at 1.94 percent, the slowest since the 2009 financial crisis. According to its government, the city is projected to see its GDP grow at 3.8 percent in 2020 and 2.8 percent in 2021, however, much of the growth will be dependent on external factors.
The government recently announced stimulus package for the recovery of its real-estate market but experts say that the oversupply of houses could hurt prices. A majority of the analysts in the poll felt that an introduction of affordable homes could help with the demand. Strong economic performance, visa reforms and the upcoming 2020 World Expo could also help, they said.
Some felt that the price correction was healthy for Dubai as property rates were inflated.
Property prices have contracted by 25-35 percent since a mid-2014 peak and there will be no respite until 2022 at least, the poll showed.
However, when asked on a scale of one to 10, where one is extremely cheap and 10 extremely expensive, what best describes the level of Dubai house prices, the median was 7, which is leaning towards expensive pricing.