The swift weakening of the dollar may actually work wonders for the real estate market in Dubai since the same is heavily dependent on spending by foreign customers according to experts. A weaker dirham which is a direct result of the weaker dollar may spell positive news for the UAE’s economy at large since it may lead to a major boost for real estate, retail and tourism which are sectors relying on spending by foreign investors/customers. The dollar has witnessed depreciation going up to 6%.
Dubai may witness higher demand for residential and commercial properties with the weakening of the dollar. According to experts, commercial realty markets should witness growth in the latter half of this year and rental trends should continue witnessing the present momentum. The commercial market is expected to garner more foreign buyers due to the weaker dirham. Experts also feel that the strong dirham benefited expats who were transferring money back home but this made property more expensive for foreign buyers and also drove up overall borrowing costs.
GDP growth in Dubai is expected to improve in 2018 and office rents have already fallen by 4.5% in the year-second quarter, 2017. Prime markets will continue witnessing higher occupancy levels and this will offer rental support. Prime rents will thus increase this year as per expert forecasts. The delivery of Grade A commercial stock will also boost the market overall. Demand in prime rental markets still remains high on account of limited supply of new stocks. Vacancies are low for the DIFC but the rate of absorption if lower for peripheral offerings like the DIFC Phase II.
Rental values have fallen in prime zones like Sheikh Zayed Road, Downtown Burj Dubai and the Trade Centre District. Rents have fallen overall by 7.5% in citywide markets in the year to June, 2017 and 0.7% over the next months could be the estimated drop. Major locations where there is high demand like Media City, Internet City and Knowledge Park also have lower vacancy rates which range between 2-3%. As a result, rentals are more stable at present. In the prime Business Bay zone, supply has increased but rentals are moving slightly downwards. Demand has gone up and this has led to stability in prices over the last year as per experts.
