According to the ratings agency Moody’s, Dubai’s property market will continue its downward trend with oversupply likely to delay a price recovery until 2016.
Residential prices in emirate skyrocketed after the real estate sector was opened to foreign investors in 2002, granting them freehold ownership rights at many developments. Only from the beginning of 2007 until August 2008, prices rallied nearly 80 percent. But the bubble burst when global economic downturn and a debt crisis led to billions of dollars worth of projects being put on hold or canceled while property prices plummeted more then 60 percent from their peaks.
Market analysts do not expect property prices recovery over the next five years. Despite the construction of few projects is still on schedule, no new projects are announced.
According to a Reuters poll, Dubai’s residential market will plummet another 10 percent before it stabilizes. However, the market remains oversupplied by about 25 percent, according to the same source.
Rasmala Investment Bank’s Saud Masud commented to local media sources it would be 2020 when property prices get back to 2008 levels assuming five or six years of recovery.
While the outlook for Dubai’s property sector remains negative, the emirate has been seen as a safe haven during turmoil that has gripped the Arab world and toppled leaders in Tunisia, Egypt and Libya. The emirate’s retail and service sectors have benefited from the unrest.[mpoverlay][/mpoverlay]