Dubai property prices fell by 12.2 percent during the past year, the largest drop in the world, according to real estate consultancy Knight Frank.
The decline in the twelve months through June was the biggest in 56 mainstream residential markets and larger than the 12 percent fall in real estate prices in Ukraine, which has been hit by almost two years of protests, a separatist insurgency, and political upheaval, Knight Frank said Tuesday in a report. Prices in Dubai fell 2.8 percent in the second quarter. Hong Kong was the best performing residential market, with prices up by 20.7 percent.
Over the past decade, Dubai’s property market has swung from boom to bust and back again. Price gains in the two years through 2014 recouped much of the losses incurred in a 2008 collapse that pushed the city to the brink of bankruptcy. Then, prices started falling again this year amid oil’s slump and weaker currencies in Russia and Europe. Regulators also introduced caps on the size of mortgages and doubled transaction fees to deter speculation.
“Weaker demand, a strong U.S. dollar and ongoing cooling measures have dampened sales volumes in the mainstream sector,” Knight Frank said.
The slump in Dubai real estate looks set to continue, according to a separate report released today by Cluttons. Villa prices will fall by a further 5 percent to 7 percent in the second half of the year, it said. Rental prices are also weak and are expected to drop another 1.5 percent to 2 percent in the second half, Cluttons said, although apartments continue to be “viewed favorably” by some investors.