UAE property transactions drop in H1 on lower oil prices

The United Arab Emirates (UAE) witnessed a decline in property transactions and values in the first half of 2015, as the country began to feel the effects of lower oil prices, Cluttons said in a new report.

Dubai recorded a seven percent drop in the number of deals on residential units, while the number of villas that changed hands fell by over 13 percent. Total real estate transactions slipped by 2.3 percent when compared to H1-2014.

“Rising villa supply levels are dampening the prospect of any immediate turn around in the performance of this segment of the residential market,” report said. “The villa market continues to bear the brunt of the Federal Mortgage Cap restrictions, which have made affordability a central issue for potential buyers.”

The emirate’s residential market expected to weaken further in the second half of 2015, amid oversupply. However, the expected lifting of international sanctions on Iran could result give a boost in to Dubai’s property sales, as Iranian nationals capitalize on the opportunity to invest in the market, the report added. 

In Abu Dhabi, house prices are projected to fall slightly this year at around one percent, while rents are expected to remain flat during the second half.  Property prices in the capital dropped 0.2 percent in the second quarter of 2015; the first contraction since the third quarter of 2012. Demand remains stable in the luxury segment of the market driven by affluent UAE nationals and GCC buyers.