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Dubai property market down, but no crash in sight

dubai infrastructure buildup| By TAP Staff| A mismatch between buyer and seller expectations is attributed to be one of the main reasons for the signs 0f Dubai property market levelling off, according to analysts.

The “over-exuberance” seen in recent months is clearly losing steam and this by itself should ensure that the market does not head towards the traditional crash.

The annual price growth in the Dubai property market has fallen to 23 per cent. While this is still a significant year-on-year growth it is a very interesting indicator that perhaps investors are now looking elsewhere and believe the market may be fully valued in the short to medium term. Indeed residential sale prices increased by just 1% compared to the second quarter and considering that growth in the second quarter was some 6%, this does seem to indicate a significant cooling of interest.

The reasons for the change include new regulations by the Dubai authorities. According to one analyst, historically many buyers would pay the full price for Dubai property to get a toe in the water and some exposure to what has been a phenomenal real estate sector. There seems to be a sea change in this particular area with buyers looking for better value and sellers not willing to discount their prices – yet!

This impasse between buyers and sellers is expected to have an impact upon short to medium term real estate prices in Dubai. Should there be further fading of interest, some investors may well decide to cash in their chips and look elsewhere. In such an event, it would act as yet another element of downward pressure on Dubai property prices which would hopefully help to avoid the dreaded real estate crash.