Dubai’s residential sector faced a challenging second quarter of 2020, with social distancing measures, coupled with Covid-19’s economic impact, affecting market performance, said global property expert Chestertons.
However, with encouraging transaction figures in June, a move towards more typical sales volume is expected in Q3, stated Chestertons in its latest Observer: Dubai Residential Q2 2020 report.
Residential transactions totalled 5,233 units during Q2, representing a 40% fall year-on-year and a quarterly fall of 45%, valued at AED9.06 billion ($2.46 billion).
The sharp decline in transactions is largely a result of preventative measures to reduce the spread of Covid-19 restricting sales activity during April and May, where total sales stood at 1,739 and 1,373 units, respectively.
Eased restrictions during June had a notable impact on sales volume, with monthly sales increasing to 2,121 units, indicating the first steps to a recovery in transaction levels.
Chestertons Mena's strategic consultancy head Chris Hobden said: "While we expect residential prices and rents to decline further over the second half - a result of challenging economic conditions and a declining expatriate population - there are positives to draw from Q2 that will support Dubai’s residential sector moving forward."
"A notable fall in new off-plan sales launches over H1 2020 bodes well for supply and demand dynamics longer-term and the release of Dubai’s official house price index, Mo’asher, will contribute to greater transparency and increased market confidence," he stated.
Developers refrained from launching new projects for sale over the second quarter, leaving total off-plan sales launches at 4,458 units for H1 2020. This compares to 12,222 in H1 2019 and 21,435 in H1 2018.
In the sales market, average apartment prices fell 2.6% from Q1 2020, an increase in the rate of decline from the previous quarter, and a 9.8% fall on an annual basis, remarked Bobden.
The most significant price declines were witnessed in Discovery Gardens, falling 6.1% to AED 524 per sqft, closely followed by Motor City where prices decreased by 5.3% to AED 535 per sqft.
The Greens once again exhibited resilience with moderate declines of 0.5% to AED 836 per sqft, while Business Bay also performed relatively well with a decrease of just 1% to AED 997 per sqft. Dubai Marina also performed comparatively well, declining by 1.1% to AED 1,009 per sq ft. Annually, apartment prices fell by an average of by 9.8%.
Villa sales prices saw a more moderate fall of 1.2%, and on an annual basis average villa prices fell by 7.1%.
Palm Jumeirah, often one of the more buoyant areas in Dubai, saw the steepest quarterly price fall of 2.2% with average prices now at AED 1,820 per sq ft. The Meadows/The Springs prices saw a fall of 2% q-o-q, following a rise 1.2% the previous quarter, with average prices reaching AED 815 per sq ft.
The Lakes, Arabian Ranches and Jumeirah Park all witnessed quarterly declines of less than 1%, at 0.4%, 0.6% and 0.7%, respectively. Average prices at The Lakes stood at AED 980 per sq ft, down from AED 1,038 in Q2 2019, with average prices at Arabian Ranches and Jumeirah Park standing at AED 790 and AED 720, respectively.
Annually, Jumeirah Park was the only area to see a double-digit fall in average prices, falling from AED 827 per sqft in Q2 2019, a decline of 12.9%.
“There was often a gap seen between buyer and seller price expectations over Q2, with average prices likely to see further declines as transaction volume gains pace,” added Hobden.
In Dubai’s apartment rental market, rates declined by 3.9% in Q2 with all areas showing declines in average rental rates, a direct result of the economic impact of Covid-19.
Motor City witnessed the sharpest quarterly rental decline of 6.6% with a one-bedroom apartment now available for AED 53,000, whereas, on an individual unit-type basis, three-bedroom units at Dubailand feel by 10%, to AED 99,000 per annum.-TradeArabia News Service