Dubai house prices will probably fall this year because of rising supply and lower demand, though the emirate and its real estate companies can weather the drop, according to Standard & Poor’s.
Residential property prices in the emirate may retreat between 10 percent and 20 percent, S&P said in a statement Monday. The slowdown follows three years of price gains in the United Arab Emirates, with the property market set to “soften” this year and early in 2016. Economic growth will ease because of the decline in oil prices, said the ratings firm, which also noted volatile local stock markets.
“Real estate companies in the U.A.E. are better armed to deal with the current slowdown and should be able to absorb it with limited ratings impact,” S&P credit analyst Franck Delage said in the report.
Dubai teetered on the brink of default in 2009 after its property market crashed, wiping as much as 60 percent off house prices since they peaked in 2008. The emirate’s diversified economy, positive demographics and measures taken by local regulators since the crash should help prevent any repeat crisis, according to S&P. The U.A.E. is home to about 6 percent of the world’s proven oil reserves.