Emirates NBD Dubai Real Estate Tracker™

4 Min | 09 September 2015

Real estate agents indicate two-speed market through the summer, as property values weaken while rental demand remains strong

Dubai, September 9, 2015: This press release contains the third release of data collected from a new survey of the Dubai real estate sector, sponsored by Emirates NBD and produced by Markit. August’s survey highlights a further slowdown in Dubai property values, with 60% of real estate agents reporting a drop in average sold prices over the past three months and only 13% indicating an increase. Softer market conditions were also reflected in the latest new buyer enquiries data (54% noted a decline over the past three months), which panellists linked to greater caution among buyers and weaker underlying investor sentiment, alongside the usual summer lull in transaction volumes.

The latest survey nonetheless pointed to a rebound in confidence regarding the outlook for the next 12 months, with the proportion of agents expecting a rise in average property values (45%) outstripping the number forecasting a reduction (30%). Meanwhile, the latest survey of Dubai households signalled that a majority continue to expect rising property values during the year-ahead (65%), against just 17% that anticipate a fall.

Positive trends continued on the lettings side of the market over the three months to August, with real estate agents reporting both a rise in newly agreed rentals and increasing levels of new enquiries. Robust demand patterns in turn contributed to upward pressure on rents, with the latest survey suggesting an especially strong increase in apartment rental prices.

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

“The Dubai Real Estate Tracker survey is consistent with price data and shows a further slowing in the residential real estate sector over the summer months. While the slowdown is partly seasonal, other factors including concerns about the economic outlook and USD strength have weighed on demand. However, the lettings market remains robust both in terms of the volume and price, suggesting that population dynamics are supportive of the real estate sector.”

Key Findings:

Majority of real estate agents report a fall in average sold prices over past three months...
...but property values are expected to rebound over the course of the next 12 months
Robust letting market trends and upbeat household sentiment recorded in August

Sold prices, new buyer enquiries and price expectations

During the three months to August, exactly 60% of Dubai real estate agents noted a decrease in average sold prices, while 13% signalled an increase. As a result, the headline Emirates NBD Dubai Average Sold Prices Index posted 26.7, down from 35.4 in June and below the neutral 50.0 threshold. The index for apartments (27.0 in August) remained above the equivalent reading for villas (24.3). Anecdotal evidence cited generally subdued market conditions in comparison to earlier in 2015 and a wait-and-see approach from buyers amid uncertainty about the regional economic outlook. Some survey respondents also noted that rising supply had placed downward pressure on sold prices.

The latest survey suggested that lower international new buyer enquiries were a key factor weighing on demand conditions. Measured overall, the rate of decline in new buyer enquiries was slightly faster than that seen in the previous survey period.

Looking ahead, however, Dubai real estate agents signalled a rebound in confidence regarding property values for the next 12 months. At 57.6 in August, the index was up sharply from 39.3 in June and the highest since the survey began in April. Some agents suggested that improved yields would boost investment demand over the course of the next 12 months.

New lettings activity and rental prices
On the lettings side of the market, the latest survey pointed to rising activity, greater sales enquiries and increased rental prices, according to real estate agents. That said, the rate of expansion in each case moderated from that recorded in the previous survey period. By property type, real estate agents indicated particularly strong demand patterns for apartments, as has been the case since the survey began in April.

Meanwhile, the latest survey of Dubai households broadly mirrored the rental price trends indicated by real estate agents over the same period. Among those that had experienced a rent renewal during the three months to August, just over two-thirds (68%) signalled a rise, although this was a smaller proportion than that seen in the previous survey (74%). Looking ahead, among those with a rent renewal in the next three months, just over half (51%) expect a price increase while only 12% anticipate a reduction.

Dubai Real Estate Agents: Average Sold Prices (vs. three months ago)
50 = no-change, not seasonally adjusted