Dubai’s housing market has defied high hopes for a turnaround this year, dogged by oversupply in luxury and neighboring political crises, according to a report by brokerage and consultants Cluttons.
Property prices slipped 5.6% in the year ending in September, with prices falling 1.9% in the third quarter, according to a report released by Cluttons on Wednesday. The downturn has not affected neighborhoods and price bands evenly, with luxury particularly impacted thanks to oversupply.
“Dubai’s residential market remains in a state of flux,” Cluttons said in the report. “Like many other global residential markets, confidence levels amongst buyers remain subdued.”
At the end of October, the average price in the city was AED1,246 (US$339) per square foot.
The weakest performing segments of the market were at the higher end of the spectrum. Villas in Jumeirah Village were down 12.3% this year and those around the Arabian Villas Golf Club have fallen 7.3%.
Competition from neighboring new developments has dogged these communities.
The Dubai market saw its peak before the global financial crisis in 2008. While economies the world over began to recover, Dubai felt the second blow thanks to the collapse of oil prices in 2014 that have continued to affect regional demand for luxury housing in the city.
Prices have slipped by nearly one-third since peaking in 2008, according to Cluttons.
Prices in the most expensive neighborhood in the city, Burj Khalifa, are 71.2% below their 2008 peak. The average price there is now AED2,500 (US$680) per square foot.