UAE is set to continue expanding its economy for a sixth consecutive year this 2015, with a forecast of gross domestic product (GDP) growth at 4.5%.
The real estate sector was a major player in the economy last year, accounting for 13.3% of GDP—good for third. While the connected Travel and Tourism sector contributed 8.4% of the UAE’s GDP, a figure that is expected to grow by 5.1% this year. The sector generated 307,000 jobs, and jobs growth in travel and tourism of 5.4% is forecast for 2015.
The Government of Dubai strongly contributes to the expansion of the travel and tourism industry, backing major developments including the new Al Maktoum International Airport and the extension of Dubai International Airport.
Dubai’s population continues to expand, growing by 5% to 3.8 million UAE nationals and expatriates by the middle of this year. These figures underline the healthiness of the labour market. The annual inflation rate currently stands at 4.3%, which is lower than the 4.6% rate forecast for this year. Here is the Dubai real estate look back for the second quarter of 2015.
Apartments
The Dubai property market softened during the second quarter of 2015, with average apartment sales prices across the city falling to the same level as in the first quarter of 2014—although not enough to ruffle some feathers. It’s just the way it goes for a market that’s maturing.
The correction comes as less of a surprise when analyzing the volume of transactions, which did not keep pace with sales price growth but instead rose at a slower rate from the first quarter of 2013. Demand declined slightly in the first quarter of 2014 and rather more steeply in the second quarter of that year.
Prime area apartments
Average sales prices in Business Bay, a prime area, have risen gradually over the past few years even though demand has remained constant. In terms of supply, the district currently has more than 40 developments currently under construction by various developers, the majority of which are expected to be finished and handed over in 2016 and 2017. Additional developments are currently on the pipeline.
In Downtown Dubai, prices were 19% lower than at the 2014 peak. During the second quarter of this year, demand has been steady and at a healthy level.
Sales prices in Dubai Marina and Jumeirah Beach Residence (JBR) are declining with buyers’ interest picking up.
Palm Jumeirah sales prices are 12.5% lower than at 2014 peak. There are 20 projects currently are under development on the island with more at planning stage.
Villas
Sales prices of villas have been falling for the third quarter in a row. Since the beginning of 2015, buyers’ sentiment has strengthened, prices have continued to fall and, as a result, the number of transactions recorded in the villa segment has started to rise again.
Following the general trend across the emirate, the volume of transactions of prime villas in high-end developments within the Jumeirah Park, Jumeirah Islands, Emirates Hills and Arabian Ranches communities has kept increasing since late 2014. Prices in the first three areas declined in the second quarter, while sales prices at Arabian Ranches’ rose by 5%.
Among these prime communities, Arabian Ranches supply is the highest with more than 4,000 villas. The community is also the fastest growing. By 2018 Emaar, the developer will deliver nearly 2,500 new homes including the Mira Oasis, Lila, Azalea and Samara Rosa, and Rasha Villas sites.
SOURCE: Roots Land Real Estate
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