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Dubai’s real estate market may have to brace for tougher times ahead, though more villas and apartments were sold in the third quarter of the year, Chestertons said on Wednesday.
Sales rose by 50 percent in the third quarter of the year compared to the previous quarter. However, the total transaction volumes were still down by 21.7 percent, compared to the third quarter of 2019.
Chris Hobden, head of strategic consultancy at Chestertons MENA, said property prices and rents could drop further during the last three months of the year, citing that the economic slowdown caused by the pandemic, coupled with a decline in population, could dampen the market.
“Dubai witnessed a clear increase in transactional activity during the third quarter, building on a recovery seen during the final month of the second quarter, following the easing of COVID-19 restrictions. However, transaction volumes remain lower annually, and we expect both prices and rents to face further downward pressure over the final quarter of 2020,” Hobden said.
“The ongoing economic impact of COVID-19, and a likely reduction in the emirate’s population, both key drivers of Dubai residential prices, are set to hamper market performance,” he added.
Sales, rental markets
The third quarter saw 4,587 completed properties sold, compared to just 1,902 in the second quarter.
The huge jump was largely due to pent up demand from the second quarter, along with developer promotions offered to clear unsold inventory.
Average apartment prices dropped by 3.4 percent quarter-on-quarter and 11.4 percent year-on-year, with properties in Dubai Sports City witnessing the largest declines.
Villa sales prices saw a more moderate fall of just 0.2 percent quarter-on-quarter and 5.8 percent year-on-year.
Apartment tenants also witnessed continued rental declines, which averaged 3.6 percent.
However, villas proved more resilient, with rents falling by just 1.2 percent and 5.6 percent on a quarterly and annual basis, respectively.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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