Property prices in Dubai are expected to find a bottom soon as the consistent decline over the last five years have made prices fair in global standards, according to a Swiss bank UBS study released on Monday.
Dubai is among the only four cities along with Singapore, Boston, and Milan worldwide where the property prices are fair-valued, UBS said in its Global Real Estate Bubble Index 2019 released on Monday.
"Dubai's house prices are highly volatile. Since the last peak in 2014, prices have fallen by almost 35 per cent and the index value has declined sharply. Prices are expected to find a bottom soon. The market is in fair value territory," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
The study, which was carried out across 24 cities around the world, found that bubble risk appears greatest in Munich, followed by Toronto, Hong Kong and Amsterdam. Frankfurt, Vancouver and Paris are in bubble risk territory as well, while major imbalances characterise Zurich, London, San Francisco, Tokyo and Stockholm. Valuations are stretched in Los Angeles, Sydney, Geneva and New York. By contrast, property markets in Chicago remains undervalued. Of late, studies have revealed that certain areas in Dubai are witnessing uptick in property prices as low prices attract buyers to the market.
Reflecting growing confidence in Dubai's property market, real estate consultancy Savills said on Monday that Dubai is set to overtake New York as the global branded residences capital by the end of 2019, thanks to a pipeline equal to its current supply of just over 20 schemes. This surge in supply coincides with the city's hosting of Expo 2020.
In terms of branded residences, Savills rates Dubai first with 45 complete and pipeline projects followed by 31 in New York, 24 in Miami, 16 in Phuket, 14 in Bangkok, 13 in Istanbul, 12 in London, 11 in Boston, eight in Bodrum and eight in Kuala Lumpur.
"As market conditions and buyer preferences evolve, there is huge potential for the branded residences sector. Branded property is positioned to stand out in more challenging market conditions," said Paul Tostevin, director, Savills World Research.
Dubai is forecast to add 24,000 high income households in the next five years, but has a very full supply of complete and pipeline projects, it said, adding that Emaar Hospitality Group is growing fast with an extensive pipeline across the UAE and wider Middle East under its Address and Vida brands.
A record number of schemes opened this year, with 60 projects delivering more than 9,000 additional branded units across 21 countries. This record is set to be broken again in 2020 when nearly 70 schemes are due to complete. This growth is being driven by the hoteliers with hotel-branded schemes accounting for 86 per cent of the completed schemes and 96 per cent of the pipeline supply. Marriot International, whose brands include Ritz Carlton, St Regis and W, is the market leader and is set to remain so. However Accor is rising fast and has a pipeline equal to Marriott International.
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