Monday, Jun 01, 2015

Dubai: The residential property sales price index in Dubai fell in April 2015 compared to a year earlier, as asking prices for apartments and villas registered a negative growth.

Reidin, a property information company, said in its report on Monday that apartment sales prices dropped 3.6 per cent last month from the same period last year, while villa sales prices posted a 0.4 per cent year-on-year decline.

Between March and April, apartment prices dropped 0.87 per cent, while villa sales rates dipped 1.84 per cent. Consequently, the price index for all residential units fell by three points, from 281.4 to 278.7, representing a drop of 1.07 per cent in April 2015.

Rents, on the other hand, increased 2.9 per cent last month compared to the same period last year. Month-on-month figures , however, posted a 0.69 per cent decline.

Property prices in Dubai have been on a decline recently. Deloitte had earlier predicted that the trend would continue, with sales prices softening by a further 1 per cent to 5 per cent and stabilize thereafter.

Explaining the reasons behind the downtrend, John Stevens, managing director at Asteco, said there has been a shift in market preference away from high-end luxury to value-for-money projects located in completed or almost-complete developments.

“There have been a number of launches in recent months that have proven extremely popular in terms of take-up. Moves by Dubai Municipality to augment existing reasonably priced rental stock, with the allocation of over 100 hectares of land in Muhaisnah 4 and Al Quoz 3 to developers to build affordable housing for rent, to those earning between Dh3,000 and Dh10,000 per month,” Stevens said.

Ali Khan, CEO of property portal Bayut.com and co-founder of Zameen.com, said the real estate market is going through a period of correction and feeling the effects of slow growth in the global market and strengthening of the US dollar.

“The government’s efforts have a hand therein, too. The regulations by Dubai government imposed last year to ease speculation and avoid market overheating have started to bear fruit. The effects of mortgage cap and hike in registration fees have now become pronounced and are pushing the market towards stabilization, while helping it lose some of the excess weight of value it put on earlier,” Khan told Gulf News.

“The [other] reason is the global period of slow growth as forecast by the International Monetary Fund. In comparison of March 2014 to March 2015, prime real estate in global power houses like New York and Singapore lost 4.4 per cent and 12.6 per cent in value, respectively, compared to only 1.1 per cent in Dubai,” Khan added.

Khan said the strengthening of the US dollar against the sterling and other currencies, including Indian and Pakistani, have consequently made the dirham more expensive, affecting the “buying decision and subsequently hampering demand.”

“The oil price crunch has also affected demand from Russian and Saudi investors, whose wealth has lost value due to the global crisis.”

By Cleofe Maceda Senior Web Reporter

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