“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020, thanks to the slowdown of sales price declines and the levelling of rental rates,” said Chris Hobden, head of strategic consultancy at Chestertons Middle East and North Africa (Mena).
From October to December last year, the only location that showed upward price adjustments was Downtown Dubai, and this was mainly due to the handover of new high-end units. Tenants in Dubai International Financial Centre (DIFC), Discovery Gardens, Dubai Silicon Oasis, Dubailand, International City and The Views did not see any increase.
Among the areas that continued to see rental declines, apartments in Business Bay, Dubai Marina and Motor City posted a 2 percent decline in rents, whereas rental declines averaged 3 percent in The Greens and Dubai Sports City.
In terms of sales prices, the largest declines in the apartment segment were recorded in Jumeirah Village Circle, with a 9 percent decrease from the previous quarter.
Locations that did not show any price movement from the previous quarter were Business Bay, Dubailand, Dubai Marina and The Greens.
The only location that registered a price increase in the last quarter was The Views, where the sales price of property units went up to 1,089 UAE dirhams from 1,044 UAE dirhams in the previous quarter.
Sales and rental rates in Dubai have been on a downtrend in recent years, registering a 20 percent decline since 2014, largely due to an oversupply of new housing units. Some analysts have predicted that rental and sales figures will pick up only after 2020.
According to Firas Al Msaddi, CEO of fam Properties, the real estate market is indeed going through a “very challenging” phase, and it will probably take about three years before things could pick up again.
However, he noted, the market isn’t actually worse than what everyone thinks, citing that billions of dirhams worth of properties in Dubai are
still being snapped up by buyers.
“The market is very challenging for those who don’t have the holding power. It’s a very tough market. I think that the sentiment, however, is worse than the market. The actual market is better than the sentiment,” Msaddi told Zawya in an interview.
Published figures from the Dubai Land Department (DLD) showed that developers managed to generate more sales last year than in 2018. The sales of villas, apartments and commercial spaces reached 51 billion UAE dirhams in 2019, up from 38 billion UAE dirhams a year earlier. The figures don’t include mortgage and land transactions.
While the figures are indeed looking positive, there’s no clear sign that the market has already reached the bottom. “The good news for tenants is there will be ongoing opportunity for social mobility as rents are likely to continue to soften,” Chestertons’ report says, adding that supply remains the “single biggest” driver of declining residential prices.
In 2019, about 45,000 completed units were delivered to the property market. A further 90,000 units are scheduled by developers to complete this year.
Despite the challenges, property owners are still seeing decent rental yields. According to Chestertons, there are many communities in Dubai that continue to offer returns of between 6 percent and 9.5 percent and these include Dubai Silicon Oasis, Jumeirah Beach Residence, Dubai Sports City, Business Bay and Palm Jumeirah. In major destinations like London or Hong Kong, rental yields are below 5 percent.
(Writing by Cleofe Maceda Cleofe.email@example.com , editing by Seban Scaria)
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