The majority of the real estate agents (47 per cent) are expecting a fall in Dubai property values in 2016, while 32 per cent forecast a rise, said a report.

Real estate agents indicated a subdued end to 2015 for the Dubai property market, with the majority of survey respondents noting declines in new buyer enquiries and transaction numbers over the three months to December, according to a survey of the Dubai real estate sector, sponsored by Emirates NBD and produced by Markit.

The latest drop in new buyer enquiries was the sharpest since the survey began in April, which real estate agents linked to weaker investor sentiment and muted underlying market conditions, it stated.

Survey respondents generally noted that market conditions would favour buyers over the next 12 months, as construction volumes look set to remain strong while the uncertain economic outlook has acted as a brake on investor demand.

December’s survey also indicated weaker trends on the lettings side of the market, with new rental enquires falling for the first time since the survey began in April.

This in turn contributed to a slight drop in new lettings activity at the end of 2015, alongside the slowest rise in newly agreed rental prices in the short survey history, it stated.   

Commenting on the Emirates NBD Real Estate Tracker, Khatija Haque, the head of Mena Research at Emirates NBD, said: "The survey is consistent with recent data on residential sales and lettings prices in Dubai, which show prices continuing to ease."

"However, the momentum of price decline has moderated in December. The strong US dollar and low oil prices are likely to remain headwinds for the real estate sector in 2016," he added.

According to the survey, the real estate agents reporting a fall in average sold prices (55 per cent) continued to exceed those that indicated a rise (21 per cebt) during the three months to December. Although the headline Emirates NBD Dubai Average Sold Prices Index remained below the 50 no-change threshold, the latest reading was 32.6, up from 28.8 in October, to signal the slowest pace of decline since June.

Survey respondents indicated softer falls in property values for both apartments and villas at the end of 2015. Transaction volumes were also reported to have dropped at a slower pace during December.

However, real estate agents indicated that new buyer enquiries decreased at the steepest pace since the survey began in April. This was despite a softer fall in new sales leads from international buyers. Anecdotal evidence suggested that the uncertain economic outlook had weighed on demand in December.

In contrast to the downbeat expectations reported by real estate agents, latest data indicated that Dubai households are overwhelmingly optimistic about property values over the course of 2016.
Around two-thirds of Dubai households (66 per cent) anticipate a rise in their property value during the next 12 months, while only 14 per cent forecast a reduction.

Real estate agents signalled another marginal decline in new letting activity during the three months to December, with stable demand for apartments offset by a marked drop in the number of villa rentals, stated the survey.

Survey respondents highlighted a moderate rise in newly agreed rental prices, although the latest increase was the slowest since the survey began in April.

There were a number of reports that cooling demand conditions could place downward pressure on newly agreed rents over the next three months. Reflecting this, latest data pointed to a drop in new rental enquiries for the first time since the survey began in April, it added.

At the same time, Dubai households reported the slowest rise in rent renewal prices in the short survey history. People living in apartments were more likely to report a rise in their rental price than those living in villas.

However, in contrast to the trends expected by real estate agents for newly agreed lettings, households in Dubai overwhelmingly expect higher rent renewal prices in the next three months, said the report.
 
Around 62 per cent anticipate an increase in their rent renewal price, while only seven per cent expect to negotiate a reduction, it added.-TradeArabia News Service