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Bloomberg: Dubai’s Property Slump Has Another Two Years to Run

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Property slump in Dubai will last for at least another two years as property prices fell sharply as developers put a record number of new residences on the market, Bloomberg said.

About 31,500 homes will probably be completed in 2019, more than twice the city’s average annual demand over the last five years, according to Craig Plumb, head of Middle East research at broker Jones Lang LaSalle. That compares with the 22,000 homes finished in 2018.

The property market in Dubai has peaked in 2014, and continued despite estimates that the sector would see a rebound after the recession in the real estate market continued.

The Gulf region witnessed financial tightening, especially in Saudi Arabia and the UAE, on the back of falling oil prices. The rise in the dollar led to a decline in potential buyers. In contrast, construction did not decline as developers continued unabated.

Residential value in Dubai fell by about 25% from the peak of 2014, as well as a 10% drop last year, and is expected to continue this year with rates varying between 5% and 10%.

Plump said he did not expect a recovery in the real estate market before 2021, especially with the city’s organizing of the World Expo 2020, and UAE officials could take steps to stabilize the market by curbing construction.

The government owns Industrial Islands Development Company, Nakheel and Dubai Properties Group. The government also owns 29% of Emaar Properties, which built the world’s tallest tower, the Burj Khalifa.

Property prices in Dubai have fallen sharply, reaching 30% in some vital areas.