“The real estate market recovery in Dubai continues to be hampered by the increasing excess supply being released to the market. However, our research has highlighted 41% of all residential transactions now relate to completed units, up 6% from 2017, indicating a shift in buyers’ interests, with the trend set to gain further momentum in 2019 as developers offer attractive incentives and long-term payment plans,” said Ivana Gazivoda Vucinic, Head of Consulting, Chestertons MENA.
In the sales market, Q4 continued the trend seen throughout 2018 as prices witnessed further declines in both the apartment and villa markets. In the apartment segment, prices in Dubai Sports City, International City and Jumeirah Village Circle (JVC) all fell by 9% compared to the previous quarter, to AED793 per sqft, AED516 per sqft and AED759 per sqft respectively.
Downtown Dubai and The Greens fell by 8% and 7% respectively with prices now at AED1,515 per sqft in Downtown and AED965 per sqft in The Greens. In contrast, Dubai Marina remained one of the most resilient locations for investors and end users witnessing a decline of just 1%, with prices now at AED1,185 per sft. Annually, it was Discovery Gardens which saw the steepest decline, with prices dropping by 25% year-on-year to AED636 per sqft. The most resilient apartment location was Dubailand with just a 5% adjustment from the previous year.
In the villa sales market, Palm Jumeirah, once again, observed a further decline in Q4 with a 7% decrease to AED2,035 per sqft. The Meadows and Springs remained unchanged from the previous quarter at AED936 per sqft while Arabian Ranches fell by just 1% to AED840 per sqft indicating the prices in these particular communities may have bottomed out.
In the rental market, apartments in Dubai Marina, Dubai Silicon Oasis, Dubai Sports City, Dubailand and International City, witnessed a 5% decline in Q4, with a one-bedroom in Dubai Marina now available for AED82,500. Downtown Dubai, JLT, JVC and Dubai Motor City all declined by 4% from the previous quarter with a one-bedroom in the former now available for AED95,000. Due to the increasing stock of smaller format and studio apartments, these units appear to be most affected by market adjustments with a year-on-year recorded drop of 16% for studios and 12% for one-bedroom units.
In the villa rental market, the highest Q-on-Q declines were witnessed in three-bedroom units with average rental declines of 4%. In Al Furjan, which fell by 7%, on average, a three-bedroom unit is now available for AED138,000. In Arabian Ranches and JVT, average rental rates fell by 4%and 3-bedroom units are now available for AED160,000 and AED150,000 respectively. On Palm Jumeirah, rental rates fell by just 1% with a three-bedroom villa renting for AED300,000.
“From a rental perspective, Dubai continues to be a tenant-friendly market, with many making significant savings by renegotiating terms and price with current landlords or moving to a cheaper location within their current district or relocating to a new community,” added Vucinic
The addition of new stock and limited new demand continues to place pressure on landlords with many of them competing on several fronts to retain or attract new tenants with multiple cheques, rent-free periods and in some cases agency fees being covered.
According to Vucinic, this could result in landlords taking advantage of the holiday let market, which has been legal in Dubai since 2016. “With demand for annual contracts weakening and rents continuing to fall, short-term holiday rental could prove very lucrative, especially in popular locations, particularly as we edge ever closer to Expo 2020,” she said.
Chestertons MENA offers a full range of property services, including residential and commercial sales and leasing, investment agency services together with professional valuation and plant and machinery services. In addition, Chestertons MENA has a very active international sales division, specialising in the sale of prime, Central London residential apartments and houses to investors from across the entire MENA region with 33 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 Dubai, Abu Dhabi, Saudi Arabia.
For more details, please visit http://www.chestertons-mena.com/
© Press Release 2019