UAE property prices may fall further this year, says S&P

Real estate prices in the United Arab Emirates (UAE) are likely to continue declining in 2016 as lower oil prices and a strong US dollar keep the market under pressure, Standard & Poor's Ratings Services (S&P) said in a report.

"We see no sign of market improvement for the UAE real estate sector, despite housing affordability improving from the current price environment," the ratings agency said in a note, adding that an ongoing oil slump had impacted business activity, while a strong dollar has made it more expensive for foreign investors to buy property in the country.

Developers in the country rated by S&P could see a 10 percent drop in residential sales prices in Dubai this year.

However, no major negative rating actions are expected over the next 12 months.

Developers' revenues are seen to remain robust over the period as most of their projects fall under the pre-sold category.

In addition, the lifting geopolitical restrictions on Russia and Iran may potentially aid a recovery of the UAE property market, by opening new investment flows into the regions' real estate markets, which would offset lower demand from other countries.