Dubai's residential market "shows few signs of bouncing back quickly" from what is now a three-year downturn, according to note published by the National Bank of Kuwait (NBK).

Citing numerous data sources, the note states that there is only 'moderate' demand for residential property in Dubai, but supply continues to rise as new developments hit the market.

Supply “is expected to grow over coming quarters," it said, citing figures from real estate consultancy firm JLL, which forecast a 9 percent increase in supply this year. The NBK note said that within the first few months of this year, some 17,000 new homes are due to complete including the New Dubai Gate project at Jumeirah Lakes Towers, The Pad at Business Bay and Eagle Heights in Dubai Sports City, among others. Although delivery numbers are likely to slow in the second half, supply is expected to increase by a further 8 percent in 2019, it added.

JLL's study, published last month, stated that 43,000 new homes are project to complete this year, and 40,000 are due next year, although it said materialisation rates are actually likely to be much lower than this.

Last week, property consultancy CBRE said in a press release that although Dubai witnessed "solid growth" in off-plan transactions last year, accounting for 65 percent of total residential sales, "competition is likely to mount in 2018, with a huge number of new units set for delivery and with further project launches expected".

“Whilst off-plan residential transaction volumes registered strong momentum during 2017, competition is likely to mount in 2018, with a huge number of new units set for delivery and with further project launches expected", it said.

Mat Green, UAE head of research and consulting for CBRE, said in a press statement: "Around 30,000 new units are anticipated to complete this year and we expect to see increasing pressures for the off-plan sector and the wider market, particularly with the recent introduction of VAT.”

CBRE has said that 90,000 units are expected to complete between 2018 and 2020.

One brighter spot for those looking to sell homes, according to NBK's note, is the weakening of the U.S. dollar, to which the UAE dirham is linked, as it will make Dubai property more attractive to international investors.

(Reporting by Michael Fahy; Editing by Shane McGinley)

(michael.fahy@thomsonreuters.com)

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