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Low oil prices and housing market in Dubai and Abu Dhabi

In January 2016, benchmark crude reached a 12 year low with prices falling under $30 a barrel because of oversupply in the market driven by the decision of OPEC to defend market share and not reduce supply.

Decrease in the price of oil has many multiplier effects including an impact on real estate in Dubai. Housing rents in Abu Dhabi fell 2 per cent in the three months to the end of July as the global fall in oil prices continued to bite. According to new figures from the property data company Reidin, average rents fell 0.61 per cent in the month of July. Rents in the capital now stand at the same levels they were two years ago and about 1 per cent lower than a year ago.

Reidin, whose data is used by many of the big property brokers in the UAE such as JLL and CBRE, said that average rents in Dubai fell by a similar rate, down 0.62 per cent in July and down 1 per cent during the three months.

The Reidin and Global Capital Partners report, A Tale in Three Markets, describes how there has historically been a low correlation between oil and equities, and real estate price moves.

 Unlike in Abu Dhabi, rents in Dubai have been falling for the past two years and now stand 4 per cent lower than they did a year ago and 5 per cent lower than they were two years ago.

      A turnaround in the Dubai property market is “imminent” due to a short supply of new units and the wider economic picture.

      A report published in June by real estate consultancy ValuStrat found that rent and sale prices in Dubai’s residential property sector are showing strong signs of reaching a plateau. But Cluttons said in April that Dubai property prices are set to decline further in 2016, after a 2.2% drop in residential values in the first quarter.

 Data from property portal Bayut.com found that asking rents for the apartments listed on its website in both Abu Dhabi and Dubai were falling steadily. Bayut.com reported that in the year to the end of July this year, rents for studio apartments in Abu Dhabi fell 5 per cent to Dh56,000 while average rents for one-bedroom apartments sank 6 per cent to Dh91,000. Average rents for two-bedroom apartments in the capital fell 4 per cent over the past year to Dh129,000. In Dubai, Bayut.com said that rents for studio apartments fell 6 per cent year-on-year to Dh57,000 while average rents for one-bedroom apartments in the city fell 7 per cent to Dh92,000. Average rents for two-bedroom apartments in Dubai fell 3 per cent in the year to the end of July to stand at Dh145,000.

Projects from this area

Marquise Square, Dubai

Spectacular views of the world’stallest tower. Just seconds from the Dubai Water Canal, anticipated to become the next Dubai Marina.

A striking 29-floor structure created by a highly regarded local Emirati family developer. Inside, a luxurious range of studio, onebedroom, two-bedroom and threebedroom apartments, finished to some of the finest standards in the city.

From just AED 895,000 with only a 15% deposit, this opportunity will also offer a solution to the huge undersupply of studio apartments at the very heart of Dubai.

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Al Sana

This is a five-story serviced apartment complex, located beside RAK Hospital, in Ras al Khaimah’s premier residential district.  The RAK Free Zone is only minutes away on traffic-free roads. 

Beaches, marinas, world class golf courses, shopping centers, hotels, and all the amenities of fast-growing Ras al Khaimah are easily accessible. Downtown Dubai is an hour’s drive on a superb highway.

Mountain View’s residential facilities are ideally located for any RAK-based businessman or professional seeking a luxurious, secure, centrally located residence. Build quality is of the highest international standard, with a US-based international project management firm supervising construction.

The ground floor of the Mountain View complex will have reception, offices, gym and other services for residents and guests. Each of the 5 floors above will hold a total of six serviced apartments. The 800 sq ft one-bedroom and 1200 sg ft two-bedroom serviced apartments are available with full ownership rights at special pre launch prices

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