The Dubai property market recorded the largest decline in the world over the past year as prices fell by 12.2 percent according to real estate consultancy Knight Frank. It added that the market would continue to slide for at least the remainder of 2015.
The property market’s fall in Dubai during the 12 months through June was the biggest in 56 mainstream residential markets Knight Frank monitors. Prices in Dubai fell 2.8 percent in the second quarter of this year.
The helter-skelter nature of Dubai’s property market has seen many highs and lows over the past ten years. Price gains between 2012 and 2014 recouped a majority of the losses incurred during the 2008 collapse that saw the city nearly go bankrupt.
However, real estate prices started falling again this year due to tumbling oil prices and weaker currencies in Russia and Europe. The caps on the size of mortgages and doubled transaction fees to deter speculation introduced by regulators have also contributed to the market’s downfall. “Weaker demand, a strong U.S. dollar and ongoing cooling measures have dampened sales volumes in the mainstream sector,” the Knight Frank stated in a press release.
A report from Cluttons, a UK-based real estate services provider, added that the property market slump in Dubai looks set to continue. It noted that villa prices are likely to fall by a further five percent to seven percent in the second half of 2015. Rental prices are also weak in the city and are expected to drop another 1.5 percent to two percent in the second half.
The second largest drop was in the Ukraine where protests, a separatist insurgency and political upheaval have plagued the country for almost two years now. Real estate prices there have fallen by 12 percent in the past year. Hong Kong was the best performing residential market, with prices rising by 20.7 percent year-on-year, the Knight Frank report added.