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- Transaction volumes for completed and off-plan units up 45% Q-on-Q and transaction values increased in Q3 by 16% to AED8.52 billion for completed properties and 46% to AED10.48 billion for off-plan properties
- Market recovery in 2020 will be supported by new government initiatives to boost demand and control supply
Dubai: Sales prices in Dubai are expected to continue to soften for the remainder of the year, by up to 5% in some instances, while rental rate declines appear to be slowing with decreases of just 1% witnessed in Q3 according to the latest research from leading international real estate services firm, Chestertons’ Observer: Dubai Market Report Q3 2019.
Continued pressure on Dubai’s residential prices and rates has been a result of oversupply, with an anticipated 50,000 new units expected to be delivered in 2019, a 150% increase on 2018 where supply topped just 20,000 residential units.
Nick Witty, Managing Director, Chestertons MENA, said: “As we anticipated, there were further sales price declines in Q3 for both apartments and villas due to excess supply and muted economic growth. The rental market proved to be more resilient however, with a marked slowdown in the rate of decline.
“We anticipate the 10-year residency visa, the economic stimulus package and perhaps, more importantly, the introduction of the new Real Estate Committee, which has the mandate to boost demand and control supply, contributing to a more favourable outlook in Q1 2020,” added Witty.
In the sales market, average villa prices were down 3% in Q3 while apartment prices witnessed a 4% decline from the previous quarter. In the villa market, the Meadows and Springs were resilient with no change and remained at AED850 per sqft, while Palm Jumeirah softened by 2% to AED1,927 per sqft. Arabian Ranches witnessed the highest decline in Q3 at 5%, with rates now at AED793 per sqft. Prices at The Lakes and Jumeirah Park both declined by 3% to AED1,010 per sqft and AED804 per sqft respectively.
“The supply of brand-new properties, with their wealth of amenities, has resulted in older communities bearing the brunt with prices being lowered to compete for and attract end-users,” said Witty.
In the apartment sales market Business Bay, Downtown Dubai, Dubailand, Dubai Sports City and International City all witnessed very little change, declining just 1% compared to the previous quarter at AED1,000 per sqft, AED1,391 per sqft, AED700 per sqft, AED703 per sqft, and AED478 per sqft. In contrast, Dubai Silicon Oasis and Dubai Motor City saw the greatest declines of 12% to AED612 per sqft and 10% to AED 630 per sqft respectively.
Dubai Marina and the Greens, typically two of the best performing communities, both had more pronounced declines of 6% to AED 1,030 per sqft and AED849 per sqft respectively, a direct result of the current supply and demand equilibrium.
In the Emirate’s rental market, rates continued to soften in Q3, however the rate of decline has slowed with average villa and apartment rates softening by just 1%. This could indicate the rental market is beginning to recover, which could be accentuated further by the three-year rental freeze currently being explored by the Dubai Land Department.
Several apartment communities in Q3 had no movement in rental rates including Business Bay, Discovery Gardens, Dubai Silicon Oasis, JVC and Motor City with a two-bedroom apartment in each community renting for AED100,000, AED75,000, AED60,000, AED73,000, and AED90,000 per annum respectively.
The Views witnessed the largest decline in Q3 with an average 5% decrease with the studio format experiencing the most pronounced drop of 8% and now available for AED55,000 per annum. DIFC and The Greens saw rental decreases of 2% with a one-bedroom in DIFC available for AED95,000 denoting an 8% decrease, while a studio in the Greens is currently renting for AED50,000, a 9% Q-on-Q decrease.
“The decrease in rental prices in smaller units, in some locations, is indicative of tenants moving to larger properties that have become more affordable. This has resulted in landlords of smaller units reducing their rates to be more attractive to prospective tenants,” added Witty.
In the villa rental market, Arabian Ranches, The Springs, The Meadows, The Lakes, Al Furjan and Jumeirah Islands saw no rate change from the previous quarter, an indication rental rates in these locations have bottomed out, particularly when considering Jumeirah Islands, the Meadows, and Arabian Ranches, all witnessed declines of 11% in Q2.
The biggest villa rental decreases were felt in JVT and Victory Heights with an average Q-on-Q decline of 3% with a three-bedroom available for AED 112,500 and AED 130,000 respectively.
The volume of off-plan transactions rose by 45% and the value for the same category increased by 46% to AED10.48 billion – suggesting positive signs of recovery, however, this could be attributed to developers registering units on mass as they near handover in Q3.
-Ends-
Chestertons MENA offers a full range of property services, including residential and commercial sales and leasing, investment agency services together with property management, strategic consulting and valuation services. In addition, Chestertons MENA has a very active international sales division, specialising in the sale of prime, off plan and completed, central London apartments and houses to investors from across the entire MENA region with 34 offices across the UK capital.
With over 200 years of experience, Chestertons is one of the leading international property consultancy firms, in addition to one of the biggest networks of branches in London, Chestertons also has offices throughout Europe, reaching Australia and Singapore and a burgeoning Middle East network with offices in Abu Dhabi, Bahrain, and Dubai.
For more details, please visit http://www.chestertons-mena.com/
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