DUBAI, Feb 11 (Reuters) - Dubai is expected to this year see the biggest number of new homes completed in more than a decade, adding to pressure on a once-booming but now struggling property sector already weakened by excess supply.
The Middle East financial hub, where the private sector shrank in January for the first time since 2009, has faced a slowing real estate market for most of the past decade.
A total of 62,500 residential units are scheduled to be completed this year, Knight Frank said on Tuesday, adding that would be the biggest number of new units since 2008 even though not all were ultimately expected to be finished.
“In the short to medium term this influx of supply will continue to put pressure on prices and rents,” Knight Frank said in a report.
There were 70,885 new housing units delivered in 2008, just before Dubai was hit by a credit crisis sparked by a collapse in its booming real estate sector - a key contributor to state revenue in a country which does not have the oil wealth of its Gulf neighbours.
Residential sales prices fell an average of 6% in 2019, as an estimated 35,171 new units were delivered, compared to a 8.6% drop in 2018, Knight Frank said.
Apartment prices on average fell by 8.2% last year while prices of traditional style houses, known as ‘villas’, fell 7.3%. Rents dropped 8.1%.
Housing prices are down at least a quarter since 2014, driven by oversupply.
Dubai has tried to stem the downturn by creating a commission in September to regulate the sector though its not clear what action has been taken.
Citing data showing a 26% year-on-year increase in residential transaction volumes in 2019, Knight Frank said there were “very early signs of recovery, although prices remained under pressure.
In Abu Dhabi, residential sales prices fell on average by 7.5% in 2019 during which an estimated 6,586 units were delivered.
This year, more than 8,500 units are expected to be delivered in the oil rich emirate, the most since 2013, Knight Frank said. (Reporting by Alexander Cornwell; Editing by Kirsten Donovan)