Has dubai's property market peaked?

Dubai's property market is showing signs that it may have peaked last year, as the real estate sector ended 2014 on a "quiet note".

The residential property market surged in recent years, as the emirate's economy rebounded from financial crash, leading global price rises for several quarters. Now, though, subdued growth levels were reported across almost all sectors of the market in Q4, according to the latest market overview by JLL, as the fall in oil prices impacted the nation.

"Average prices and rentals in the residential sector appear to have stabilized over recent months, with some locations registering marginal declines," says the property company's research.

"Growth in the retail and hospitality market was restrained following a period of uncertainty due to oil price fluctuations and a decline in tourist and resident purchasing powers. Meanwhile, the office market continues to be situated close to the bottom of the cycle with rental growth restricted to Grade A office space."

JLL does not think that investor sentiment will be dampened by oil prices for long, though, as Dubai’s success at diversifying its economy and expanding its global reach makes it less vulnerable to such fluctuations.

"The next 12 months are expected to see a boost in business activity, highlighted by the government’s 2015 budget announcement which saw planned spending and revenues increase 9% and 11% respectively," adds JLL.

"However as government charges increase further in 2015, we remain wary of pressures on the cost of living as inflation registered 4% at the end of November, on the back of increasing housing & utility costs. A major negative component of the 2015 budget for real estate is the proposed 15% reduction in infrastructure spending compared to 2014.
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