Dubai property market expected to slow down in 2014

Dubai’s residential property market will slow down in 2014 after the boost sparked by Expo 2020 win subsides, experts have said.

In their Q4 2013 property review of Dubai, real estate monitor Jones Lang LaSalle said the emirate ended the year on a high note, with prices increasing 22% compared to 2012 and rents rising 17%, but “2014 is expected to see a slowdown in the unsustainable levels of growth seen in 2013.”

The report said the recovery has been broad based and noticeable in prime as well as secondary and more affordable locations. Increased regulation in the property market and the Expo 2020 win contributed to this  boost.

“2013 saw a definite improvement in sentiment and confidence towards the Dubai real estate market, culminating in the Expo 2020 decision, that provided a particular boost in the final months of the year.  Sentiment and confidence are important drivers of the Dubai real estate market, but the underlying economic and demographic fundamentals have also improved in 2013,” Craig Plumb, Head of Research at Jones Lang LaSalle in MENA, said.

However, he added: “The pace of growth seen in late 2013 may however prove to be unsustainable, given the significant over supply and high completion levels expected in some sectors.“

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Dubai introduced several measures in 2013 to control speculation in the property market. This included doubling the transaction fee on new properties from 2 to 4% to limit the frequent buying and selling of properties and a stricter mortgage cap, increasing the downpayment on properties made by UAE and foreign buyers.

“These measures should help reduce some of the speculative pressures and reduce the likelihood of a significant price correction in 2014,” Plumb said.

Dubai saw a recovery in all property sectors in 2013, with residential, retail, hotel and industrial sectors witnessing strong growth. Growth in the office sector was more selective and concentrated in a few prime locations, the report said.