The second quarter 2017 real estate review issued by leading local consulting firm ValuStrat – reports that two thirds of apartment areas covered by their VPI Residential Price Index witnessed value increases since the previous quarter, while villas saw most of the declines. As for office space, capital values remained relatively stable on both a quarterly and annual basis.
Overall residential capital values were 14.3% below their 2014 peaks and office prices were 6.5% lower than the same period two years ago.
Mr Declan King MRICS – Managing Director & Group Head Real Estate commented ‘… ValuStrat was one of the first firms to introduce a proprietary index to the Dubai real estate market a few years back. Our goal was always to bring increased transparency and improved real time intelligence – helping all stake holders better understand what is happening and make informed decisions. Our VPI was at the forefront of tracking the early signals of localised price stabilisation in the residential sector late 2015, and signs of a broadening market recovery last year…’
The second quarter 2017 Residential VPI (ValuStrat Price Index) displayed an overall 1.2% annual decline in values. This is equivalent to average capital values being 14.3% below the 2014 peak. Compared to the first quarter, two thirds of the apartment sub-market witnessed growth while villas saw most of the declines.
“...Since we first reported early indications of recovery 15 months ago, locations with prices that appreciated more than 10% since then are: International City (13.2%), Downtown Dubai excluding Burj Khalifa (9.8%), Motor City (12.3%), and Discovery Gardens (10.1%). While the highest capital declines for the same period, ranging from -5% to -10%, were seen in Dubai Marina (-5.7%), Jumeirah Lake Towers (-9.6%), Dubai Sports City (-7%), Al Furjan villas (-5.7%), and Jumeirah Islands (-5.7%)….” said Haider Tuaima, Research Manager at ValuStrat.
During Q2, 64% of overall residential transaction sales volume was off plan. Locations included Jumeirah Village with 84% of sales being off plan, Business Bay at 81%, Jumeirah Beach Residence and Downtown Dubai at 62%.
“…Significant sales of off plan properties in established locations, particularly those with competitive payment plans, resulted in slowing price growth and transaction numbers of ready properties…” Tuaima explained.
Residential investment yields have compressed by four basis points since the beginning of the year, as market rents for the first half of this year were 7.7% lower than last year. The highest net yields were registered in Discovery Gardens, Dubai Sports City and Remraam at 6.04%, 5.96% and 5.68% respectively.
This year’s total new supply of residential apartments and villas is estimated at 25,000 units, 28% of which have been completed, as most of the new residential stock was in Dubailand, International City and Dubai Silicon Oasis. Many projects previously delayed from the past 18 months are either completed or expected to deliver this year.
Overall transacted office prices saw annual declines of 2.4% and quarterly declines of 7%. The median transacted price for Q2 stood at AED 10,506 per sq m (AED 976 per sq ft).
As of May 2017, Dubai had 80,136 hotel rooms and 24,300 hotel apartments, with an additional 13,660 keys slated for completion this year. Average occupancy from January to May was 85%, compared to 83% the same time last year. The Average Daily Rate (ADR) for YTD May 2017 was 3% less, while the Revenue Per Available Room (RevPAR) dipped 0.9%, from same period last year.
Due to easing of visa policies, Russian visitor numbers have climbed at a staggering annual growth rate of 101% to become as the 10th largest source market for Dubai visitors. More interestingly, Chinese visitor numbers were ranked as the 4th largest source market with 58% annual growth.
Industrial property prices witnessed further marginal declines during Q2 from Q1 2017. Lower rents continue to be observed in locations such as Ras Al Khor & Al Quasis, with marginal declines also seen in other locations such as DIP, Al Quoz, JAFZA & Jebel Ali.
-Ends-
About ValuStrat
ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Due Diligence and Divestment services across a diverse range of industry sectors since 1977. Offices in the UAE, Saudi Arabia and Qatar serve over 750 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.
About the ValuStrat Price Indices
The ValuStrat Price Index for Dubai’s freehold office sector is constructed to represent the quarterly price change experienced by typical office space within Dubai. The ValuStrat Price Index for Dubai’s freehold residential sector is constructed to represent the monthly price change experienced by typical residential units within Dubai. The VPI uses a comprehensive weighted sample representing more than 90% of all property types across the city and is built by our expert RICS Registered Valuers
The latest in-depth 100+ page residential report that includes citywide analysis of 26 freehold districts, including the ValuStrat Price Index, transaction volumes, service charges, Price to Rent Ratios and Net Yields in now available to subscribers.
© Press Release 2017
