Tag Archives: market
Currency fluctuations adding to slowdown in Dubai property market
Residential property prices in Dubai fell again during the second half of 2016 and the slowdown is projected to continue. Data from two sets of figures covering the second quarter show that the real estate market is slowing although sales are holding up. However, currency fluctuations are adversely affecting demand from foreign buyers. The data from CBRE shows that it was the sixth consecutive quarter of declines with the average sales rate down 2% quarter on quarter and 12% year on year, with the most significant fall recorded in the upper segment of the market. ‘Prices within the mid-market segment have proven to be far more resilient to this downward rate trend, reflecting the current demand for affordable accommodation in freehold communities,’ the report says. Although sales have held up relatively well, rental values in the mid-market segment of the market in areas like Al Barsha, Oud Metha and Bur Dubai have fallen, reflecting the higher availability of homes on the market. It suggests that the devaluation of major currencies, global economic uncertainty, redundancies and lower accommodation budgets mean that there is likely to be a further softening of demand levels and sales rates in the short term, especially for higher end and larger units. Indeed, the firm predicts that property sales rates are set to fall further by an additional 3% to 5% in the coming quarters although some locations may vary. ‘It is estimated that around 48,000 new residential units, apartments and villas, could enter the Dubai market during the period 2016 to 2018, provided that construction delays are at a minimal,’ said Mat Green, head of research and consulting UAE at CBRE Middle East. Meanwhile, the latest Phidar Advisory Dubai residential research note for the end of the second quarter of 2016 shows that residential prices dropped in the first half of the year and projects further declines. ‘Some claim this is a supply story, but supply has expanded slowly over the past thirty months. The current declines reflect soft demand,’ said Jesse Downs, managing director of Phidar Advisory. The Phidar house price index data shows that apartment lease rates declined 2.2%, while sale prices declined 3.7%, pushing gross yields up to 7.9%, a three month gain of 12 basis points while lease rates for villas decreased 3.6% and sale prices declined 1.1%, which pushed yields down to 4.7%, a loss of 12 basis point in the first half of the current quarter. ‘The compression of villa yields is unsustainable and should slowly reverse in the coming year. Sale prices and rent declines for both villas and apartments will likely continue for the next 12 months, possibly up to 18 months,’ added Downs. She also pointed out that as there are a high number of foreign buyers in Dubai currency fluctuations are affecting the real estate market. ‘The strong US dollar is one of the biggest barriers to a Dubai real estate recovery now. Unfortunately, a strong dollar also is usually associated… Continue reading
Latest RICS survey confirms UK price growth slowdown
UK house price growth, especially in London, is slowing after the historic vote to leave the European Union, according to the latest data from the Royal Institution of Chartered Surveyors. The monthly report from RICS posted the lowest survey reading in three years in July. Just 5% more respondents nationally saw a rise rather than fall in prices, down from 15% the previous month. This downward trend that is evident across the UK and the London price indicator remains more downbeat with net balance of -33% which is broadly consistent with an outright drop in prices in the capital but not quite as sharp as that reported in June. The report also says that as price growth slows for now, near term price expectations across the UK were negative for the third month in succession with 12% more respondents predicting a decline in house prices over the next three months. It is the longest stretch of negative readings since 2012. As activity falters, interest from new buyers in the UK also continues to wane, with the results showing a fourth consecutive month of falling demand to a net balance of -27. Notwithstanding the potential for near term weakness, respondents are slightly more optimistic about the 12 month outlook, upgrading their estimates for price growth relative to June. The latest data shows the net balance of those expecting prices to increase over the year ahead rising from zero to 23% but this still represents a significant softening compared to six months ago, when 66% more surveyors anticipated rising prices. For the second month running, the regional breakdown shows London and East Anglia are the only areas in which prices are expected to fall over the year ahead. Nonetheless, London exhibits amongst the strongest projections over the medium term three month average, with respondents pencilling in around 4% growth, per annum, over the next five years. On the same basis, prices are expected to rise by close to 3% nationally. The report also points out that the acute shortage of property for sale appears to be providing some underpinning for prices at present. Indeed, after staging a mild recovery through the early months of 2016, average stock levels on agents’ books have since started to fall again. In fact, the flow of new sales listings coming to the market has contracted at the fastest monthly pace on record in each of the last three reports. With supply at or around record lows in most parts of the UK, lack of choice may weigh further on activity going forward. New buyer enquiries declined markedly at the headline level during July, the fourth consecutive month of falling demand. This weakness was widespread, with virtually all areas of the UK experiencing a dip in demand during July. In keeping with the deteriorating demand backdrop, sales volumes declined sharply and at the national level, a net balance of 34% more respondents reported a fall in sales… Continue reading
Brexit hits UK commercial property market sentiment
Sentiment in the UK’s commercial property market has dampened significantly since the referendum vote to leave the European Union with investment demand falling sharply, most notably in London. The heightened sense of caution is visible across both investment and occupier sides of the market, with uncertainty pushing rental and capital value projections into negative territory, according to the latest commercial property market survey from the Royal Institution of Chartered Surveyors. It shows that and increasing share of respondents across the UK now feel the market is in an early downturn phase and the 12 month capital value and rental projections have now moved into negative territory. On a UK wide basis, occupier demand failed to rise for the first time since 2012. The headline net balance fell from +21% previously to a reading of zero in the second quarter of the year. Declines were reported in the office and retail areas of the market but demand proved somewhat more resilient across the industrial sector. The regional breakdown shows the occupier demand gauge moderated across all parts of the country, although the shift was most noticeable in London. Alongside this, availability remains constricted, with the supply of leasable space more or less unchanged in the office and retail sectors during the second quarter, while industrial availability continued to decline. Worries over a potential hit to business confidence, caused by political and economic uncertainty, appear to be reflected in respondents’ rental outlook. This is especially the case over the shorter term. Indeed, the headline three month rent expectations net balance dropped from +26% to -7% in the second quarter. The office and retail sectors experienced the steepest decline, with the reading for both now comfortably in negative territory. In the industrial sector, although the net balance softened notably, it remains positive given the very tight supply and demand conditions. When the results are disaggregated, the rental outlook is most negative in London. Over the next 12 months, rents are projected to fall by around 3% at the all-sector level. Within this, rents across the secondary retail sub market are expected to come under the most significant downward pressure. The survey report points out that the weakness in demand is perhaps even more visible on the investment side of the market. During the second quarter the investment enquiries series fell sharply, posting a net balance of -16%, down from +25% in the first quarter of the year. What’s more, all traditional sectors covered in the survey experienced a drop-off in investor interest. Foreign investor demand declined at an even greater rate, as the net balance fell to -27%. While respondents in virtually all parts of the UK noted a decline in overall investment enquiries, the trend was again most pronounced in London. In fact, at -41%, the investment enquiries gauge for the capital was the weakest since 2009. Back at the UK wide level and, despite a softening demand backdrop, the supply of… Continue reading
