3 December 2015

Dubai: Follow the Money

As Dubai enters the phase known as the ‘new normal’ and irrational exuberance vanishes, transactional activity in certain communities are down more than 40% from the peak of 2013. Transactional activity continues to fall on a YoY basis for the first three quarters in select communities. However, the third quarter of the year signals an improvement with an uptick in activity compared to the same time last year.

The above charts depict transactional activity in the high-end mature apartment space. On a 9 month comparison between 2013 and 2015, we can see that sale transactions are down in monitored areas by a maximum of 46% and a minimum of 30%. However, a comparison between Q3 14 and Q3 15, an uptick in activity by an average of 8% has transpired. We opine as prices continue to fall transactional activity will begin to climb as investors and end-users enter the market to capitalize on the available discounts in the market.

A dissection of the types of transactions reveals that mortgages account for a larger portion in 2015 compared to their historical averages, moving away from the convention norm of 3 out of 4 transactions being sales. Mortgages are considered to be an indication of home-ownership, which highlights the shift of the market from an investor based to an owner-occupied one. However, there are instances where mortgage transactions out-weigh sales, especially in the periods of a down-turn implying a higher number of re-financing and other types of transaction are taking place.

To download the full report click here: http://blog.reidin.com/PublicReports/UAE151204.pdf