|17 December, 2019

Cost of buying a home in Dubai falls despite surging demand

Capital values of residential units drop by 10% this year compared to last year

Image used for illustrative purpose. Dubai, United Arab Emirates

Image used for illustrative purpose. Dubai, United Arab Emirates

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Despite stronger buying activity, property prices in Dubai continue to fall, dipping by more than 10 per cent in less than a year, a new report reveals.

The continued decline has been due to poor prevailing sentiment of investors about the property market, as well as the abundance of off-plan property options, according to ValuStrat’s latest data released on Monday.

There was a flurry of buying activity in Dubai in the past several weeks, particularly in November, when sales volume for both off-plan and completed homes went up by 25 per cent compared to a year ago.

According to ValuStrat, the five most popular areas for buyers during the last two months were Dubai Creek Harbour, Wadi Safa 5, Dubai South, Jumeirah First and Business Bay.

Dubai Production City registered the biggest drop in capital values. Prices in the freehold area, formerly known as International Media Production Zone, that caters to media production companies, fell by 16 per cent as of November 2019, ValuStrat said.

Capital value refers to the fair market price that a property would sell for at the time of the valuation.

ValuStrat calculated the changes in capital values based on monthly valuations of a fixed basket of ready units within 26 freehold locations in Dubai.

Apartments in communities such as Discovery Gardens and luxurious Palm Jumeirah dropped by 15.2 per cent and 13.8 per cent, respectively.

Double-digit declines were also registered by properties in all the other locations monitored for the study, except for Dubai Sports City, which saw prices drop by 8.1 per cent, Downtown Dubai (9.9 percent), Emirates Hills (-8.9 percent), Meadows (-9.4 percent) and Palm Jumeirah Villas (-8 percent).

Overall, property values across Dubai dropped by 10.8 percent in November compared to the same period last year.

“[This is] mostly due to negative market sentiment as it’s currently a buyers’ market, and to numerous off-plan investment offerings in the relatively established areas that the [study] tracks, and fear of oversupply by some investors,” Haider Tuaima, head of real estate research at ValuStrat, told zawya.com.

Despite the fall in capital values, popular locations like Burj Khalifa continue to command high rates, with a typical mid-level one-bed flat facing Shaikh Zayed Road valued at more than 2.3 million dirhams. Across Downtown Dubai, where many apartments enjoy a view of the Dubai Fountain or the world’s tallest tower, flats there can still set a buyer back more than 1.4 million.

Palm Jumeirah and Jumeirah Beach Residence homes can still cost upwards of 2 million dirhams.

However, Tuaima said that the average prices of apartments in Dubai have slid below 1,000 dirhams per square foot, close to previous 2012 both levels, so there’s plenty of option for buyers who can’t afford to set aside over 1 million dirhams for a home in Dubai.

(Writing by Cleofe Maceda; editing by Seban Scaria)

(cleofe.Maceda@refinitiv.com)

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© ZAWYA 2019