Rent declines will be pronounced in areas with increasing supply and located away from central business districts
Residential property prices across Dubai registered a 12-month decline of two per cent on average while rents were down by up to 5 per cent in some key areas of the emirate, said a report by leading property consultants Cavendish Maxwell.
During the Q1 2018, residential property rents declined at a more pronounced rate than sales prices, resulting in yield compression in most communities, stated the report.
The pressure on housing allowances has also impacted rental market performance and the pool of tenants at the higher end of the spectrum continues to shrink, it added.
Cavendish Maxwell said the rent declines will be more pronounced in areas with increasing supply and those located away from central business districts and public infrastructure.
Price movement in the last 12 months has varied between communities and among different buildings within the same community, thus reflecting greater differentiation in how available properties are now trading, stated the expert.
Off-plan residential properties accounted for 61 per cent of the total transfers during the quarter, said Cavendish Maxwell in its Q1 2018 Dubai Market Report.
Approximately 3,800 housing units were handed over in Dubai during the first quarter, stated the report, which provides a summary of the residential market activity besides highlighting price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties.
The data is provided by Property Monitor, a real estate intelligence platform powered by RICS accredited property professionals. The report also includes special sector focus on the industrial and warehousing sector.
The Property Monitor Residential Survey conducted among agents in Dubai revealed that for Q2 the majority of agents surveyed are predicting that apartment and villa/townhouse prices as well as rents will decrease by up to 5 per cent.
Regarding transactions in Q2 2018, 42.4 per cent of agents expect an increase in new buyer enquiries, while 55.6 per cent of agents expect an increase in new seller instructions. Around 38.9 per cent of
those surveyed believe new seller instructions will also increase during the second quarter.
Cavendish Maxwell said a sector focus on industrial and warehousing comments on how the market witnessed a continuation of trends from previous years with the vast majority of enquiries being for the small to mid-sized sector of the market.
Buyers/tenants are being more cautious and are carrying out further due diligence on their available options prior to making real estate related decisions. This is prolonging the timeframe to conclude a transaction but is also characteristic of a more mature and stable market, said the top industry expert.
Prime yields now stand a little under 8.5 per cent which is a higher yield when compared to European markets, it added.