Dubai property prices and rents are set to fall further as losses of high-paying jobs and dwindling household incomes boost vacancies across the city, according to Phidar Advisory.
Dubai’s Property market is overvalued by around 15 percent to 20 percent but it “may or may not correct to this value, depending on power of sentiment and exogenous factors,’’ Downs wrote.
The diversion of apartment prices and rents is eroding yields and indicating further corrections are on the horizon, Downs wrote. The current vacancy rate stands at around 35 percent in preferred communities sampled while builders continue to add to the city’s supply, Downs said.
Advance sales are holding steady as developers offer buyers the chance to pay 40 percent to 60 percent of a property’s value after its completion. Some also are waiving the 4 percent transfer fee as a further incentive. Downs said that may harm the market.
“Subsidies in the form of post-handover payment plans, which equates to shadow financing will likely lead to overbuilding,’’ he wrote.
Article by Bloomberg