Home prices in Dubai will likely resume growth in 2018, as a market correction has bottomed out, boosted by the upcoming Expo 2020, according to a report Wednesday.
During the second quarter, residential property values across Dubai dipped 1.5% from the first quarter, according to the fifth annual report by Cluttons, a real estate consultancy in the United Arab Emirates.
Apartments fared better than villas, with prices dropping 1% in the former compared to a 2.2% drop for the latter.
Although prices trended downward, that fall appears to be nearing an end, as the Expo effect starts to filter through, according to Cluttons. During the first half of 2017, just seven of the 32 submarkets the firm tracked in the emirate registered price falls, with all other locations seeing no change in values.
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In the rental market, villa rents are expected to end the year 10% down from 2016, while apartments are expected to demonstrate greater stability, with virtually no change in average rates when compared to 2016.
"We expect it (Expo 2020) to drive up the rate of job creation and tenant demand, but this is not expected for another one to two quarters at least," Murray Strang, head of Cluttons Dubai wrote in the report.
Expo 2020, a world fair with varied themes to showcase achievements of nations, will mark the first of its kind in the Middle East, Africa and South Asia and is expected to attract 25 million visitors to the UAE.
Leading up to the exposition, the United Arab Emirates is expected to invest US$100 million in new constructions across the nation in 2017, a 95% increase from 2016, according to an earlier report by JLL. The majority of the spending, or about US$66 million, is concentrated on Dubai projects.
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Across the UAE, the upcoming mega event, the stabilization of oil price, as well as new tax regulations the government has introduced, will also boost economic growth and thus rejuvenate property markets, according to Faisal Durrani, head of research at Cluttons.
"For the country’s real estate markets, this is expected to translate into widespread stability and marginal growth in some segments by the end of 2018," he said in the report.
In nearby Abu Dhabi, the first six months of 2017 has seen a continued lackluster performance of residential values, with values overall dropping 0.9%. Apartments posted larger corrections of -1.4% in the first half of 2017, compared to just -0.3% for villas, according to the report.