Dubai house prices fell by 8.22% y-o-y in 2018

In Dubai, residential property prices fell by 8.22% during 2018, worse than last year’s 5.23% decline, amidst weak economic growth, low investor sentiment, and an oversupply of housing. During the latest quarter, house prices in Dubai dropped 1.98% q-o-q.

Dubai's property market has been one of the world's most volatile. Dubai saw one of the world's worst housing crashes from Q3 2008 to Q3 2011 with house prices plunging by 53%. 

House prices in Dubai are expected to remain subdued this year, mainly due to huge supply. In 2018, about 43,000 units were added to Dubai’s total residential stock (around 491,000 units at end of 2017), but only 8,000 new housing units will be added to the Abu Dhabi market (251,000 units at end of 2017), according to JLL MENA.

Several other factors have affected the market. The Federal Mortgage Cap, introduced in 2013, has slowed the pace of residential value appreciation in Abu Dhabi and Dubai. In addition, the Dubai Land Department recently doubled property registration fees from 2% to 4% to dampen property demand. Finally the implementation of the value added tax (VAT), which became effective in January 2018, is another factor. The 5% VAT only applies to home sales after three years of the project´s completion. Sales within three years of completion have 0% VAT rate.

Rents, rental yields: good yields in Dubai at 5.19%

Dubai apartments are costly at around $5,918 per sq. m. 

UAE: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
Dubai $710,160 $3,070 5.19%

Recent news. After expanding by 2.9% last year, UAE’s economy is expected to grow by 3.7% this year, according to the IMF, on the back of firming oil prices, a pick-up in global trade, investment for Expo 2020 and easing fiscal consolidation.