The UAE’s central bank has confirmed that the country’s real estate sector continues to endure a downward trend in the 2018 prices of residential and commercial properties for four consecutive years, owing to the rising housing supply volume in Dubai and Abu Dhabi “partially in preparation for Expo 2020,” Invest-Gate reports.
In Dubai, prices dropped 8.6% in 2018 versus a 3.8% decline a year earlier, with the volume of housing properties hiking 7.8% last year compared to 9.4% in 2017. Meanwhile, Abu Dhabi’s residential supply grew by 8.1% and 6.3% in 2018 and 2017, respectively, according to the Central Bank of the UAE’s (CBUAE) 2018 Financial Stability Report.
“The total number of sales transactions in Dubai declined by 17.9% in 2018 compared to a 59.2% increase in 2017. Although the number of sales transactions in Dubai for completed properties increased by 5% in 2018, the pace decelerated compared to the 13.7% increase in 2017,” read the study, noting, “Transaction data is not available in Abu Dhabi.”
Besides, the UAE banking sector’s lending exposure to the property market nearly halved to 8.5% last year against 18.1% in 2017, whereas the growth of residential mortgage loans remained strong (9.2%) during the year.
“The UAE banking system lending portfolio of AED 1.7 trn comprised 65% of wholesale corporate loans, 21% of retail loans, 12% of lending to the government sector, with the remaining 2% extended to non-bank financial institutions,” the report highlighted.
At the end of last year, the outstanding balance of real estate loans broke the threshold of 20% of the total loans, registering USD 379 bn. “The asset quality of the commercial and residential real estate loans remained stable during 2018, while it deteriorated for the construction sector,” it concluded.