LifestyleJanuary 1, 20173 min read

Dubai Property in 2017: A Market Finding Balance

After three years of moderation, prices and rents are levelling out. The forces shaping the market this year and how buyers should position themselves.

Fatima Al-Rashid

Senior Investment Advisor

CFA charterholder with expertise in alternative investments. Fatima has structured over AED 5 billion in real estate investment vehicles for institutional clients.

Dubai's property market begins 2017 after three years of gradual moderation. Prices in many areas are below their 2014 peak, rents have eased where new supply has arrived and transactions are steady. The market is finding a balance between supply, demand and affordability.

Forces shaping the market

Supply: a significant number of homes are due for completion.
Expo 2020: preparations are accelerating.
Oil prices: still below earlier levels, affecting regional sentiment.
Population: continued growth supports underlying demand.

What balance means

A balanced market offers buyers choice and negotiating power, sellers realistic but steady demand and tenants more options. Sharp swings in either direction appear unlikely.

Opportunities

Off-plan projects from strong developers with attractive payment plans, completed homes in established areas and well-priced family villas all offer value.

Risks

New supply could put pressure on rents in some areas. Global and regional uncertainty may continue to weigh on sentiment.

Strategy

We recommend focusing on quality, location and long-term income, and using today's market conditions to negotiate favourable terms.

VAT on the horizon

The UAE plans to introduce value added tax in January 2018 at a standard rate of 5%. Details for real estate are still being clarified, but early guidance suggests that residential and commercial property will be treated differently. Residential leases and resales may be exempt, while commercial property is likely to be taxed. Services related to property, such as agency fees and maintenance, may also carry VAT. Buyers and owners should follow official announcements closely and consider how the tax could affect their costs, particularly if they own commercial property or plan transactions around the start date. Taking professional advice will be important once the rules are final.