(Bloomberg) -- Dubai home prices will likely extend declines this year and next as the market works to clear an oversupply that’s been a drag on values since 2014, according to property broker JLL.
“We’re really not at the bottom yet,” Dana Salbak, head of Middle East research at JLL, said on Monday at a virtual roundtable. “We’re likely to see single digit declines between 5% to 8% over the next year given that supply stays under control and developers continue to phase out their projects rather than flood the market.”
A property glut and faltering demand have driven Dubai home prices down by more than 30% since the market peaked seven years ago, a decline made worse by the coronavirus pandemic.
The government has responded by setting up a committee to manage supply and demand as some of the city’s largest developers continued with construction. Some developers have been calling for a moratorium on new projects in Dubai, the Middle East’s tourism and financial hub that’s grown reliant on real estate to power its economy.
At least the pace of price decreases has slowed down and demand has been ticking up, said JLL’s Salbak. Despite a yearlong decline, home prices are still about 20% above the levels reached in 2010, when a property crash following the global credit crisis in 2008 cut property values by nearly half.
“It will be awhile before we see the bottom of the market in terms of sales prices,” Salbak said.
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