Dubai developers positive in face of price drops

Dubai developers remain positive in the face of ongoing property price drops.

The emirate's housing market has had a roller-coaster couple of years, rebounding from a severe crash to an equally extreme boom, with prices rocketing at the fastest rate in the world. This year, though, Dubai has cooled somewhat, with sales and prices declining.

Values have been buffeted and bashed by changing global conditions, from the slowing Chinese economy and uncertainty in Europe to, perhaps most of all, plummeting oil prices.

"Residential prices have fallen maybe nine or 10 percent this year," Craig Plumb, Middle East and North Africa research director for Jones Lang Lasalle, tells the AFP. "We expect prices to go down further over the rest of the year."

Plumb predicts a 15 per cent fall over the course of 2015, while Knight Frank's latest house price index placed Dubai's price decline at 12 per cent in the year to June 2015.

The Phidar Dubai Real Estate International Demand Index highlights the role that currency also has to play in the market's cooldown. The index dipped "significantly" in the first half of the year, impacted by the currency exchange rate against the dollar, the pound and others, which is a key factor in attracting international investors.

Another driver of the softening has been the measures taken by officials to avoid a bubble, including a cap on mortgages. This increased regulation is also expected to prevent the market plunging into a bust once again.

Developers certainly seem to have confidence in the future, despite the gloomy press surrounding the market. More than 40,000 units have been announced so far in 2015, according to Cluttons, while firms are also returning to the kind of extravagant concepts that put Dubai's real estate on the map, with plans for the world's tallest residential tower and the world's longest indoor ski slope already on the cards.