DUBAI: Prices for Dubai’s residential real estate sank 7.4% in the third quarter of 2018 from a year earlier, with the drop accelerating from a 5.8% fall in the second quarter, the United Arab Emirates central bank said in a report on Tuesday.
Prices have been falling quarter-on-quarter almost continually since the start of 2017 because of a worsening supply-demand balance. The central bank quoted the Reidin residential sales price index, which showed prices fell 2.5% from the previous quarter in July-September.
Residential real estate prices in neighbouring Abu Dhabi, the other big emirate in the UAE, dropped 6.1% year-on-year in the third quarter after a 6.9% slide in the second quarter. One factor weakening demand for real estate is subdued employment growth in the UAE, particularly among white-collar workers who might buy homes.
Most jobs in the wealthy oil-exporting country are held by foreigners. Total employment grew just 0.6% from a year ago in the third quarter — the slowest rate in over four years — after 1.2% growth in the second quarter, the central bank said.
In the first nine months of 2018, employment grew at an average rate of 1.6% against a 2.6% increase in the same period of 2017. The central bank figures showed employment in sectors including construction and real estate continuing to expand, partly because of Dubai’s preparations to host the Expo 2020 world fair.
But employment in some sectors that generate large numbers of white-collar jobs, such as services, fell in the third quarter, in some cases at their fastest rates for several years. In an effort to bolster white-collar numbers, the UAE government last week announced a scheme to offer long-term visas to rich property investors, senior scientists and entrepreneurs.
But eligibility for the visas is tightly restricted and they do not offer a path to UAE citizenship, so analysts said the scheme might do little by itself to change employment or real estate market trends.