18 / 23
18
Mazaya Monthly Real Estate Report -
Week 4 - May 2016
Irrespective of the severity of
fluctuations and their length of time;
active markets like Dubai, Abu Dhabi
and Doha, will be able to overcome
economic fluctuations and return
to their previous levels following
each recession. This makes them an
attractive investment in the long run.
Real estate markets in the region are
starting to strike a balance between
supply and demand – a situation that
presents buyers with fairer prices and
contributes to further investment.
It is worth mentioning that real estate
prices in Dubai marked a recession ratio
of 12 per cent, over the past year, while
market indicators showed that rental
prices will undergo a decline of 10 per
cent,withreal estatepricesset todecline
by five per cent, during the current year.
Al Mazaya’s Report adds that real
estate owners are holding fast to the
prevailing rental rates – rejecting prices
being dictated by supply and demand
forces – which has had a direct impact
in increasing the fallback rates in
rentals, which ranged between five and
10 per cent, over last year’s figures.
Ostensibly, the prevailing prices are
still appropriate for both real estate
developers and owners, with the rises
reported in the recovery period being high
– reaching pre-2008 levels. Therefore,
any market corrections will not render
these real estate units unfeasible and,
importantly, will not cause owners
and developers to sustain losses.
Al Mazaya’s Report further points out that
real estate investment is a long-term game
and so market exposure to fluctuations
and price disparities is expected. The
fact that the market’s stakeholders are
accustomed to market price fluctuations
means they often set out a range of
positive and negative outcomes – before
initiating a real estate investment.
Qatar
Al Mazaya’s Report considers it highly
probable that luxury real estate in Qatar
and neighbouring real estate markets will
see a further decline in price levels. This
is based on the assumption that luxury
real estate products, particularly villas,
are largely affected by the developments
in oil markets as well as the package of
amendments currently being introduced to
spending tools and mechanisms, at both
the government and private sector level.
Real estate indicators point out that
rentals of offices and housing apartments
are undergoing a state of anticipation,
which is reflected in indicators showing
a high supply of villas and a decline
in demand. This is not unexpected,
in the face of government and private
sector expenditure cuts, due to
falling oil and gas prices, a recession
in economic activity, and job cuts.