Dubai’s property market continues to be oversupplied, according to UBS Global Wealth Management.
Despite Dubai authorities attempts to prevent a bubble and a boom in the real estate market, the market remains oversupplied, according to
UBS’s Bubble Index 2019.
“The property market in Dubai boomed between 2010 and 2014, supported by strong economic growth driven by high oil prices,” stated the report. “To curb the boom, the authorities introduced higher transaction fees and tighter mortgage standards. Consequently, real prices have fallen by almost 35 per cent since mid-2014, paralleling the weakness in oil prices.”
Despite the oversupply property prices remained affordable, according to UBS.
“Affordability has improved even though incomes have declined amid slower economic growth,” stated the report. “Despite posting the strongest population growth among all cities in the study, the market remains oversupplied.”
This month one of the biggest property developers urged property firms to stop all new projects so that the market could recover and reset.
DAMAC chairman Hussain Sajwani said the oversupply had made property prices fall nearly 25 percent since 2014.
The oversupply hit DAMAC hard as it revealed its 2Q profits fell 87 percent and its share price lost 40 percent of its value in 2019.
DAMAC’s chairman blamed rival property developing firm Emaar for causing the oversupply by “dumping” properties over the past few years, according to an interview with Bloomberg.
Upon hearing the DAMAC chairman’s comments, Emaar chairman Mohamed Alabbar told Arabian Business magazine last week: “Really? Maybe if your Q2 profits were down by nearly 90 percent, it’s difficult to focus. I know what I am focused on, which is delivering the results Emaar customers and shareholders expect.”