Average Dubai property prices soften further by 4%
Dubai's residential sector witnesses a continuation of the tough trading conditions in Q4, says Chestertons
Dubai’s residential sector in the final quarter of 2018 witnessed a continuation of the tough trading conditions experienced in previous quarters, according to new research by Chestertons.
Average apartment sales prices fell by 5 percent from the previous quarter while average villa prices softened by 3 percent. Year-on-year performance showed that apartment prices declined, overall, by 16 percent and villas by 13%.
Chestertons said the market is still favouring tenants as apartments saw a further 4 percent rental decrease with a 3 percent drop for villas from the previous quarter, a continuation of a trend which saw an overall 12 percent annual decline in apartment rental rates and 8 percent for villas.
Its Dubai Market Report Q4 2018, however, also showed that due to increased affordability, completed unit transactions saw a 22 percent increase in transaction volumes over Q3 and an overall 7 percent uplift across 2018.
“The real estate market recovery in Dubai continues to be hampered by the increasing excess supply being released to the market. However, our research has highlighted 41 percent of all residential transactions now relate to completed units, up 6 percent from 2017, indicating a shift in buyers’ interests, with the trend set to gain further momentum in 2019 as developers offer attractive incentives and long-term payment plans,” said Ivana Gazivoda Vucinic, head of consulting, Chestertons MENA.
In the sales market, Q4 continued the trend seen throughout 2018 as prices witnessed further declines in both the apartment and villa markets. In the apartment segment, prices in Dubai Sports City, International City and Jumeirah Village Circle (JVC) all fell by 9 percent compared to the previous quarter.
Downtown Dubai and The Greens fell by 8 percent and 7 percent respectively but in contrast, Dubai Marina remained one of the most resilient locations for investors and end users witnessing a decline of just 1 percent.
Annually, it was Discovery Gardens which saw the steepest decline, with prices dropping by 25 percent year-on-year while the most resilient apartment location was Dubailand with just a 5 percent adjustment, Chestertons said.
In the villa sales market, Palm Jumeirah observed a further decline in Q4 with a 7 percent decrease while the Meadows and Springs remained unchanged from the previous quarter and Arabian Ranches fell by just 1 percent.
In the rental market, apartments in Dubai Marina, Dubai Silicon Oasis, Dubai Sports City, Dubailand and International City, witnessed a 5 percent decline in Q4 while Downtown Dubai, JLT, JVC and Dubai Motor City all declined by 4 percent from the previous quarter.
“From a rental perspective, Dubai continues to be a tenant-friendly market, with many making significant savings by renegotiating terms and price with current landlords or moving to a cheaper location within their current district or relocating to a new community,” said Vucinic.
The addition of new stock and limited new demand continues to place pressure on landlords with many of them competing on several fronts to retain or attract new tenants with multiple cheques, rent-free periods and in some cases agency fees being covered.
According to Vucinic, this could result in landlords taking advantage of the holiday let market, which has been legal in Dubai since 2016. “With demand for annual contracts weakening and rents continuing to fall, short-term holiday rental could prove very lucrative, especially in popular locations, particularly as we edge ever closer to Expo 2020,” she said.
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