Oil slump starts to hurt UAE property market

The fall in global oil prices is having a knock-on effect on the country’s property market, with the impact expected to deepen, which heavily features the effects of a volatile oil industry especially on the capital.Abu Dhabi’s rental market remains insulated with an expected 3.9 per cent rise in annual rents, but it’s a different story in the commercial and sales markets.Commercial rents were stagnant in the second quarter of the year for a fourth consecutive quarter, while expects rents will weaken towards the end of the year.The emirate also experienced the first contraction in house prices since 2012’s third quarter, with prices slipping 0.2 per cent in this second quarter and expected to dive another 1.5 per cent over the rest of the year. Residential rents are also flatlining, with the worst impacts being felt on Saadiyat, where rates for three- and four-bedder apartments plunged more than 10 per cent in the first half of the year.“The impact [of the oil slump] is probably variable across the three biggest emirates,”.“The biggest impact is on Abu Dhabi, primarily because the contribution of hydrocarbons to its economy is more than 60-70 per cent.Sharjah is facing similar issues on a smaller scale, as many oil and gas companies operate there. With the scaling back of activity by hydrocarbon companies, the rate of job creation in the sector is and will continue to slow and that, in the mid term, will impact on residential demand.However,out that Abu Dhabi is not alone.It’s the same situation in every global oil centre around the world. Abu Dhabi is not immune to the impact of falling oil prices.The International Monetary Fund recently revised the country’s economic forecast for 2015 to include a 2.3 per cent budget deficit — its first since mid-2009 — and economic growth of 3.2 per cent, down from last year’s 4.2 per cent.But government has been effective in introducing measures to lessen the blow, removing fuel subsidies in August and with VAT and corporate tax on the horizon.In contrast, the Dubai market has emerged unscathed largely due to its diversity. In Dubai it’s less pronounced because it has a much more diverse economy. Its economy is continuing to grow thanks to grand plans