Dubai prices to fall this year?

Dubai property prices could fall by up to 20 per cent this year, according to Standard & Poor's.

The credit rating agency forecasts a year of "slightly lesser demand" from overseas buyers, after an early 2015 in which demand from Russia and other members of the Gulf Cooperation Council was "particurlarly subdued".

This downturn in interest, combined with a slower economy and downbeat sentiment, could see residential prices fall between 10 and 20 per cent this year.

The slow economic outlook is attributed to the impact of oil prices upon the UAE, with prices expected to stay weak all through 2015 and 2016. The Dubai stock index is also down 10 per cent year-on-year.

"General investor sentiment is key in Dubai real estate because a large majority of buyers are investors," S&P said in a statement.

S&P also warn that the emirate's growing supply of new units will also dampen prices. Indeed a new report from Phidar Advisory also cites the completion of upcoming and launched projects as a concern. The report, though, said that the current moderation in prices was healthy for the market.

Sales prices fell 1.5 per cent in the first six weeks of the second quarter of the year, according to Phidar, compared to the first quarter, while yields tightened slightly to 7.2 per cent.

The decrease in prices follows a year in which Dubai led price growth around the world, with values rebounding amid a sudden boom in interest; a turnaround from an equally dramatic collapse following the global financial crisis.