Dubai home prices to fall further in 2019 on oversupplyStaff Writer |
Middle East The Dubai government's finances rely in large part on real estate
Dubai residential property prices will fall another 5-10 percent this year due to a continued gap between supply and demand, before steadying in 2020, S&P Global Ratings said on Tuesday.
"We continue to have a very grim view of the market," Sapna Jagtiani, associate director at the rating agency, told reporters.
"Main culprit is supply," Jagtiani said, adding that other factors were the volatility of oil prices and rising interest rates.
S&P said the residential property market was unlikely to see a meaningful recovery in 2021. Prices have fallen 25 percent to 33 percent in nominal terms since 2014, the report said, citing property consultancy Asteco.
S&P said it expected them to fall another 5-10 percent this year, meaning they would approach the lows reached in 2010, after the financial crisis.
The rating agency also warned of a "stress scenario" in which government and royal family developers such as Emaar Properties, Meraas, Dubai Properties and Nakheel, do not rein in new developments.
In such a scenario, residential real estate prices could decline as much as 15 percent in 2019, and another five to 10 percent in 2020. ■
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