Earlier this month, Masood Al Awar, CEO of Tasweek Real Estate Development and Marketing, whose own firm is planning to launch an IPO later this year, said the rise of Dubai's fast-growing residential real estate market is likely to peak in 2015
“We do a lot of analytics and we do a lot of market research. We know that every eight or seven years there are some disturbance in the market and nothing can climb so rapidly,” Al Awar said.
“I think 2015 will be the peak but if we sustain it, [growth] can be prolonged to avoid the downturn… avoid the pitfall [of 2008],” he added.
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While Property prices plummeted nearly 60% in the aftermath of the Dubai property crash in 2008 and 2009, Al Awar said such a dramatic drop was unlikely this time and growth was likely to plateau as the market was being managed in a more strategic way this time around.
“We have to make sure the pitfall is prohibited and we manage the cash flow and move forward. It is about sustainability and growth,” he said.
Al Awar’s comments echo those expressed in a report last month by property consultants JLL, which claimed that growth in the Dubai residential market is slowing as government steps to curb speculative buying have an impact and higher prices start to affect demand.
Second-quarter trends in the market suggest the risks of the Dubai property market overheating and then crashing, as it did in 2008-2009, are easing, Craig Plumb, JLL's head of research for the Middle East and North Africa, told Reuters.
"It's good news that the market is slowing down," Plumb said, adding that when the market eventually reached the falling phase of its cycle, the pull-back was unlikely to be as violent as it was five years ago, when it triggered a corporate debt crisis in the emirate.
For now, the residential market is still climbing rapidly; average sale prices jumped 36% from a year earlier in the second quarter, compared to 33% in the first. Rents gained 24%, after 23% in the previous quarter.
But on a quarter-on-quarter basis, rises are slowing. Sales prices grew 6% in the second quarter, down from 10% in the previous quarter, JLL calculated. The increase in rents dropped to 3% from 7%.
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