Dubai estate agents are upbeat about the market's prospects for the coming 12 months, after a resilient year.
Sales cooled in 2015, with official figures showing that deals declined more than 35 per cent compared to the previous year.
"The number of sales transactions, excluding mortgages and land, fell from 23,000 in 2014 to 15,000 in 2015, with a similar decline in the value of these sales (to Dh22.1 billion in 2015)," Craig Plumb, head of research at JLL Middle East and North Africa, told Gulf News.
The decline, though, was partly a result of external, global factors, including the weaker Russian rouble and the stronger US dollar, both serving to make the emirate's real estate more expensive during a time of uncertainty surrounding China's economy.
Dubai's real estate also began the year with a significant hangover of high prices, following a rapid rebound from the financial crisis that left prices rocketing. In the year to March 2014, Dubai topped Knight Frank's Global House Price Index for the fifth quarter in a row, with prices rising 27.7 per cent.
Amid fears of a bubble, the government introduced a range of cooling measures to deter speculative investment, including a hike in registration fees and caps on lending, which saw the market gradually lose steam in 2015.
Supply is expected to climb in 2016, with 22,000 apartments and 7,700 villas forecast to arrive on the market, according to Asteco's latest report, which, combined with oil prices, is likely to weigh on property values further.
Asteco's Managing Director, John Stevens, though, is optimistic about the market's future prospects: "If we look to the medium and long-term, the outlook is more positive with demand more than likely to grow in line with the progress of key infrastructure projects currently underway, such as Dubai World Central Airport and Expo 2020."
Property portal Bayut.com is equally upbeat about the UAE's real estate sector, saying that despite "pockets of turbulence in the sales market", the emirate is becoming increasingly popular as a buy-to-let destination. Indeed, tough sales in 2015 have boosted the rental sector in the UAE, with average rental returns up 2 per cent in Dubai and studio rental rates up by almost a third in Abu Dhabi.
Yields can be as high as 8 per cent, says Bayut.com, compared to the 4 per cent average available in London.
The Dubai Land Department's latest figures highlight the market's ongoing diverse appeal to a range of nationalities. Buyers from the Gulf Co-operation Council states accounted for almost a third of all sales in 2015, but Indians invested AED20 billion ($5 billion) in the market last year, followed by Brits (AED10 billion) and Pakistanis (AED8 billion). Overall, 55,928 investors from 150 nationalities invested a total of AED135 billion ($26 billion) in Dubai real estate last year.
Dubai Marina and Abu Dhabi's Khalifa City were the most sought-after locations in the UAE last year, according to classifieds website Dubizzle.com. Dubai Marina received 91 millions earches for properties both to rent and buy. International City was the second most popular location for rentals with over 47 million searches. After Dubai Marina, JLT and Downtown Dubai received around 15 million searches apiece for properties for sale, followed by Jumeirah Village Circle (13 million searches).
Alan Robertson, CEO of JLL MENA, says that 2016 is expected to see "more challenging conditions" for the UAE real estate market, thanks to ongoing political tensions and the continuing fall in oil prices.
Nonetheless, he also sees a bright future ahead.
"Whilst this overall scenario will naturally impact the UAE and wider GCC region, the UAE real estate market is now better equipped to deal with such challenges than it has ever been," he comments.
Even project delays, as a result of slowing market conditions, will help to reduce the risk of oversupply, he observes.
"The UAE remains an attractive real estate market and some buyers, especially owner-occupiers and those investors taking a long term perspective may well see value at current levels," he continues.
"Overall, we remain confident that while prices and rentals will soften further in the short term, they are likely to increase again, perhaps as soon as 2017, as the UAE continues on its' path to becoming a more mature real estate market."
Dubai, UAE, Property Investment, UAE real estate, Dubai real estate