According to global ratings agency Standard & Poor’s (S&P), Dubai residential prices will fall further in 2019 on oversupply and is unlikely to see a meaningful recovery in 2021.
Before steadying in 2020, the Dubai residential property prices are expected to drop another 5 -10% in 2019 due to a continued gap between supply and demand.
Property rents and prices have fallen 25% to 33% in nominal terms since 5 years ago, as mentioned by property consultancy Asteco in the report.
S&P also added that prices is expected to fall another 5 -10% this year, coming close to the lows seen in 2010, after the financial crisis.
It also warned of a "stress scenario" in which government and developers such as Emaar Properties, Dubai Properties, Meraas and Nakheel, do not rein in new developments. In this case, prices could decline as much as 15% this year, and another 5 -10% next year.
Whether prices will go up or down, Firas Al Msaddi, CEO of fäm Properties, says that we should not take these reports for granted and not allow it to blind us from seeing true opportunities in today's real estate market.
“Their assumptions could be true and prices may continue to soften, however, it applies to the general market,” says Mr. Al Msaddi. “The opportunity today is not just to invest, but to identify and invest in undersupplied properties, the most prime properties on best prices and payment plans.”
“Rest assured if the signs of market recovery are known for everyone, we will see no such opportunities in the Dubai market.”
He continues to say that it’s a rule of thumb to invest in down markets and exit in booming markets. Additionally, it does not need an expert but courage and patience and that “real estate is never a short term investment”.
“If experts know the exact time of markets bottoming out, bouncing back or peaking out, trust me they will be the richest people on earth by now, “ he adds.
“But they are obviously not. We bought Bluewaters in April 2018 and we exited Feb 2019 at 35% net ROE as per the records of Dubai Land Department. All transactions are fully executed in building 7 Bluewater,” he concludes.
You can tune in and learn from Firas Al Msaddi on his YouTube channel, ‘Straight Property Talk With Firas Al Msaddi’.