DUBAI: Dubai's booming property market is showing signs that it may be cooling off, industry data showed on Sunday, after two years of soaring prices that had drawn warnings of possible overheating from the International Monetary Fund.
Property price rises, at close to 30 per cent year-on-year, had been among the highest in the world throughout 2013 and the first part of 2014, causing many — including the United Arab Emirates central bank — to fear a repeat of the local market crash of 2008-9, which saw prices slump more than 50 per cent.
But average residential rents fell 1 per cent in the third quarter, their first decline since 2012, pressured by weaker demand during the holy month of Ramadan and a rise in new home supply, a report by real estate investment firm CBRE said.
A separate report by property consultant JLL showed that residential rents and sales rose 2 per cent and 1 per cent in the same period, slower than the respective 3 per cent and 6 per cent increases posted in the second quarter.
"Driven by tighter government regulations and an increasing mismatch between buyer and seller expectations, the residential sector is now experiencing a welcomed period of stability," the JLL report said.
JLL added it expected rents and sale prices to remain relatively stable over the rest of 2014, "with the market behaving in a more sustainable and healthy manner".
The data is the first to suggest that the Dubai real estate market might by cooling off after soaring since 2012, and will be used by the authorities in the emirate as evidence that measures taken to prevent speculation driving up prices are beginning to impact.
Dubai's Land Department doubled last year the fee it charges on property transactions to 4 per cent, while new lending limits on mortgages were introduced by the UAE central bank.
The CBRE report on Sunday showed the fall in rents wasn't uniform but was affecting some of Dubai's more fashionable areas which had experienced the biggest rises, including Downtown Dubai — the area encompassing the world's tallest building, the Burj Khalifa — where they dipped by an average of 3 per cent.