LOADING CLOSE

Where property prices, rents are falling fastest in Dubai

Where property prices, rents are falling fastest in Dubai

Arabian Business, 10 April, 2019

Potential investors and tenants in Dubai are set to reap the benefits of competitive pricing and rental rates as several off-plan projects launched between 2014 and 2016 are delivered, according to Chestertons.

Its Dubai Market Report Q1 2019 said that in the sales market, the downward pressure on prices witnessed throughout 2018 has continued into the first quarter of 2019 with villa and apartment prices down 1 percent and 3 percent respectively.

The most resilient communities, from an apartment perspective, were Downtown, Dubailand, Dubai Motor City and Dubai Silicon Oasis, all retaining the same price levels as the previous quarter.

International City, Dubai Sports City and Business Bay experienced the greatest correction with a quarterly decrease of 7 percent, the report added.

“Last year we saw over 20,000 units enter the market, resulting in softening across the sales and rental sectors for both apartments and villas. This is a trend we expect to continue throughout 2019 as the number of units estimated to be delivered is set to be even higher. As a result, we expect to see developers and landlords continue to offer a range of financial incentives and become increasingly innovative in their approach” said Ivana Vucinic, head of consulting, Chestertons MENA.

With regards to villas, the most resilient community was The Lakes with prices unchanged from Q4 while The Meadows and Springs witnessed the highest declines, revealing a 4 percent decrease. Palm Jumeirah and Arabian Ranches both saw declines of 2 percent during the same period.

Transactional activity, for the most part, was on the rise in Q1 when compared to Q4 2018.

The completed unit market witnessed a small decline in transactional volumes in Q1 from 3,278 to 3,230 units while the volume of off-plan transactions was up 10 percent on Q4 2018.

Off-plan transaction values increased by 35 percent from AED5.82 billion in Q4 2018 to AED7.85 billion in Q1 2019.

“Off-plan sales dominated the market in Q1, indicating the raft of incentives offered by developers, including five-year post-handover payment plans, registration fee rebates, guaranteed rental returns and the freezing of property service charges, are having the desired effect,” added Vucinic.

In the rental market, the additional supply and subsequent greater choice is creating a favourable scenario for tenants with average leases for both apartments and villas witnessing a 2 percent decline when compared to Q4 2018, the report noted.

For apartments, Dubai Motor City, Dubai Silicon Oasis, Dubai Sports City and JLT all experienced a 4 percent decline from Q4.

It was only more established communities displaying resilience, with Dubai Marina and Business Bay showing no change from the previous quarter.

In the villa market, JVT bore the brunt of rental declines, with a 5 percent decrease compared to Q4 2018 while Jumeirah Golf Estates, Jumeirah Islands and The Lakes saw no movement during that period.

“Due to the supply/demand dynamics, we’ve seen several landlords offering lower rental rates and incentives to attract and retain tenants. Multiple rent cheques, rent-free periods, waiver of security deposits and in some instances the landlord covering the cost of agency fees are all becoming increasingly more common,” said Vucinic.

“We are also seeing an increase in Airbnb style rentals in the market with increasing occupancy rates year-on-year. This could be a result of ongoing downward corrections in the long term rental market,” she added.