Dubai's residential capital values down 11% in Q1

The residential VPI showed an average quarterly improvement of 0.8%

  
Dubai skyline. Image used for illustrative purpose.

Dubai skyline. Image used for illustrative purpose.

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The residential capital values in Dubai for the first three months of 2021 registered a 11 per cent drop compared to the previous year, standing at 61.9 points, according to leading UAE-based local consulting firm ValuStrat.

The residential VPI showed an average quarterly improvement of 0.8%, as the first three months of the year saw accelerated positive trends for the first time since 2014, stated
ValuStrat in its first quarter 2021 Dubai real estate review.

All established freehold villa locations monitored by the VPI saw capital values improve since the last quarter, ranging from 1.8% to 5.4%. However, only half of apartment locations improved in value, some areas saw declines of up to 2.8%.

On an annual basis, all locations witnessed price drops, some in single digits. Best performing freehold areas were International City, Arabian Ranches, The Meadows, The Lakes and Palm Jumeirah. Citywide, residential capital values were 10.9% lower than the same period last year.

According to ValuStrat, the Q1 review reported the highest recorded number of home and office units’ sales transactions, this was at a time when the office ValuStrat Price Index (VPI) has stabilised and the residential VPI saw quarterly improvements for the first time since 2014.

The ValuStrat Price Index (VPI) is a valuation-based index that tracks change in capital values for a representative fixed basket of properties.

“A positive trend which commenced H2 of 2019, only cut short by the Covid-19 restrictions last year, now as we welcomed 2021, that trend has intensified with improved investor confidence, boosting demand, with record number of title deeds registered, and a gradual growth towards previous peaks," remared Haider Tuaima, the Head of Real Estate Research at ValuStrat.

"The average residential annual rent in Dubai was AED 76,910, apartments at AED 55,000 and villas at AED 211,485. Dubai’s residential net yields averaged 6.1%, with apartments at 6.4% and villas at 4.9%. Residential occupancy in Dubai was estimated at 80%," he added.

As far as residential supply is concerned, ValuStrat said 2020 saw the completion of total 36,015 housing units of which 27,435 were apartments and 8,580 were villas/townhouses.
For 2021, estimated upcoming supply currently stands at 46,316 apartments and 10,563 villas/townhouses, it stated.

Approximately 7,294 units finished construction during the first quarter, equivalent to more than twelve percent of total expected supply this year, it added.

The valuation-based index (VPI) for Dubai’s office capital values remained relatively stable on a quarterly basis, grew a marginal 0.1% QoQ at 59.5 points.

On a location level, Dubai International Financial Centre (DIFC), Jumeirah Lake Towers, and Downtown Dubai gained 6.8%, 2.3%, and 3.8% respectively. On office type and quality level, shell & core grade A offices saw the highest quarterly growth of 7.7% with no change annually.

"Improved buyer confidence appears evident in many parts of the Dubai residential market, with statistics showing increased numbers of sales transactions and price rises. Anecdotal agent evidence confirms strong demand and speaks of faster sales campaigns and competitive bidding occurring between some purchasers, especially in villa communities and now also in some of the more sought-after apartment locations too," remarked Declan King MRICS – MD & Group Head Real Estate ValuStrat.

"Influence of Covid on housing requirements, and an undersupply in some communities and sub-sectors are factors as to why this is happening - other reasons may also include a perception that prices had actually over corrected and that perhaps they now represent good value, with potential for upside gain should this prove not just to be a temporary phase and the market continues to recover," he added.-TradeArabia News Service

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