According to a report coming from Cluttons, an international real estate consultancy firm, there has been a 54 percent decline in the oil price in the past 12 months and because of this phenomenon, the United Arab Emirates real estate sector is now beginning to feel the impact of the property transactions which is leveling across Dubai, Abu Dhabi and Sharjah.
According to the report of Cluttons, there is a direct relationship between the state spending and the hydrocarbon revenues which will put pressure on the rate of creating jobs. There is likewise a perceived further reduction in the prices of oil when Iran will receive the signal to start exporting its oil. This will in turn impact the rate of office spaces take up and will also have an effect on the creation of houses and overall demand for residential units. The impact is also expected to be variable within the nation’s three largest emirates. On the other hand, the return of Iran to the picture on the national real estate equation will particularly be momentous for the property market.
UAE highlights in its real estate market:
- Transaction levels when it comes to properties are falling on all levels across Dubai, Sharjah and Abu Dhabi
- The decline in oil prices is impacting job creation and is affecting real estate market
- Affordability as well as supply levels are impacting the market for villas
- A boost coming from the investors of Iran is expected when the sanctions will be lifted
- The rental market might weaken but this will be correlated with a strong tourism sector
There are a couple of economic factors that are at play which will definitely impact the level of transactions in the property sector in the near term. The decline in the prices of oil has seen the government across the region to take necessary fiscal measures in order to boost the financial positions of the oil-exporting countries. This includes a deregulation in the prices of fuel and the future movement towards the introduction of corporate tax as well as VAT.
Though this may seem an adverse impact in the region, the global market is on high spirits as the international investment coming from the region is increasing. Other sub-sectors like painting and decorating (i.e. companies like MC Decorators Ltd, Northampton) are bound to do well in the near term.