Dubai property market ‘unlikely’ to experience drastic correction

Executives in London Business School survey disagreed that prices would plunge in the same manner as they did following the 2008 financial crisis.

Dubai's skyline. A new survey has shown that the emirate's property market may even rise. Reem Mohammed / The National

Dubai’s property market is unlikely to face another 2008-style plunge, according to the London Business School.

The institution carried out a survey of more than 200 business executives to gauge their views on the market, which is predicted to face price drops of up to 20 per cent in some areas, according to the ratings agency Standard & Poor’s.

However, 84 per cent of survey respondents said they did not believe that prices would plunge in the same manner as they did following the 2008 financial crisis.

The executives, who are made up of the business school’s own alumni and current executive MBA students, were evenly split on whether prices were likely to rise or fall at all.

Although 50 per cent felt that there would be a decline, 47 per cent said prices were likely to remain stable or even increase.

More than two-thirds also believed that the market was maturing and growth would not continue at the same pace as it had in recent years.

“The vast majority of executives surveyed do not believe that there will be a drastic decline in residential real estate prices in Dubai over the next 12 months,” said Joao Cocco, a professor of finance at London Business School.

“Only 3 per cent of those surveyed expect an annual decline larger than 20 per cent.”

He added that it was “reassuring” to see that more than two-thirds of executives did not believe prices would keep rising as quickly as over the past couple of years, when the real estate market grew by double digits.

The consultancy Knight Frank's recent Global House Prices Index showed that Dubai was one of the worst-performing housing markets in the first quarter of this year.

A year-on-year decline in house prices of 6.1 per cent meant that it finished 53rd in a ranking of 56 markets, with only China, Cyprus and Ukraine reporting steeper drops.

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