Developer Nakheel has laid off around 300 staff in recent weeks as the ongoing downturn in Dubai's property market has begun to bite.

A source told Zawya that the layoffs at the government-owned developer of projects such as Palm Jumeirah and Deira Islands have occurred within the past few weeks.

In an emailed statement to Zawya, the developer said: “We continue to enhance efficiencies by implementing policies, such as outsourcing non-essential positions, that are in the best long term interests of our stakeholders.”

The Dubai real estate market has suffered a four-year downturn in property prices, with many of its major developers reporting slowing sales as concerns grow about a potential oversupply of residential properties on the market.

Ratings agency S&P Global said in a note published last month that prices and rents have dropped by 25-35 percent since the market's last peak in mid-2014, adding that its 'base case' scenario is for a further 5-10 percent decline in 2019, before a stabilisation in 2020. However, it also warned of a 'stress scenario', i.e. if supply is not reined in, "especially if government and royal family-related developers (Emaar Properties...Meraas; Dubai Properties and Nakheel) with attractive land banks and economies of scale, continue to launch new development".

Under such a stress scenario, prices could fall by 10-15 percent this year, and by 5-10 percent next year, S&P Global's note said.

In January, JLL MENA published a report which stated that 62,000 new homes are forecasted to be delivered in Dubai this year. The agency's head of research, Craig Plumb, told Zawya that he expects around half of these to actually come to market.

"If this is achieved, 31,000 would represent the highest ever level of residential completions in a single year in the Dubai market,” he added.

(Reporting by Michael Fahy; Editing by Mily Chakrabarty)

(michael.fahy@refintiiv.com)

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