UPDATED, Monday, April 20, 1:00 p.m.: Once the hottest housing market in the world, Dubai is experiencing a fall from grace.
Property prices in the Emirati city have dropped more than 25 percent since their peak in 2015, according to a new JLL report cited by the Wall Street Journal. Low oil prices, political turmoil and weaker currencies across the Middle East have all contributed to the slowdown.
Oversupply has also played a pivotal role in the downswing. According to JLL, 31,000 homes will be completed this year, and nearly 1,200 cranes are still active in Dubai.
The slowdown is impacting the biggest developers around the United Arab Emirates. Emaar Properties PJSC, which developed the Burj Khalifa, saw its shares drop 39 percent during 2018. And high-end projects have also been hit, with projects stalling on the man-made islands of Palm Jumeirah and the World, the Journal reported.
The UAE is responding by offering five- and 10-year visas so that expats working in the country stay longer and purchase homes. The government is also targeting buyers outside the region and have looked to reduce the cost of doing business in the country to boost the economy.
Amr Aboushaba, an executive with UAE developer Damac Properties, said that shifting towards developing more affordable homes coupled with government intervention could save the market.
“Once these things change, there will be no issue of oversupply in the market; it will be an undersupplied market,” he said. [WSJ] – Dennis Lynch
Correction: a previous version of this story erroneously stated Dubai is the capital of the United Arab Emirates.