For Q2 2020, residential transactions dropped 40 percent year-on-year (YoY) and 45 percent quarter-on-quarter (QoQ). The number of transactions reached 5,233 units valued at 9.06 billion dirhams ($2.47 billion).
The sharp decline in the second quarter of the year is largely due to preventative measures to reduce the spread of COVID-19, restricting sales activity during April and May, according to Chestertons report on Q2 2020.
“While we expect residential prices and rents to decline further over the second half of 2020 - 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,” Chris Hobden, Head of Strategic Consultancy, Chestertons MENA said.
Average apartment prices in Q2 2020 dropped 2.6 percent compared to Q1 2020 and 9.8 percent compared to Q2 2019. The highest price declines were witnessed in Discovery gardens (6.1 percent drop), followed by Motor City (5.3 percent drop).
Villa prices fell 1.2 percent QoQ, while on an annual basis average villa prices dropped 7.1 percent. Palm Jumeirah saw the steepest quarterly price drop of 2.2 percent.
“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,” Hobden said.
Apartment rental market rates declined 3.9 percent in Dubai during Q2 2020. Motor City saw the largest quarterly decline of 6.6 percent, while on an annual basis average rents dropped 14.8 percent in Motor City and 13.2 percent in The Views.
On a quarterly basis, the villa rental market saw a 2.6 percent decline in Q2. Al Furjan saw the largest drop with average rental declines of 5.7 percent. On an annual basis, The Springs (12.2 percent drop) and The Meadows (12.7 percent drop) witnessed the sharpest rent falls.
“Landlords will need to demonstrate flexibility on rents and payment terms over the second half of 2020, with tenants increasingly seeking shorter lease lengths and payment through four to six cheques becoming widely expected,” Hobden said.
“While the longer-term outlook is less certain, assuming a broad economic recovery next year, we expect to see greater stability in residential rents and sales prices over 2021,” he said.
(Reporting by Gerard Aoun; editing by Seban Scaria)
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