Jumeirah Village villas registered a 12.3 per cent decrease in average capital values to Dh833 psf from Dh950 psf during Q2. Prices of apartments at Green Community in DIP
declined 8.2 per cent while the Arabian Ranches witnessed price dips of 7.3 per cent.
Murray Strang, head of Cluttons
Dubai, said: "These markets, in particular, have faced competition from surrounding developments that are newer, cheaper and often more affordable, especially for those looking for rental options. Arabian Ranches has faced stiff competition from nearby Nshama, while Al Furjan and the second phase of units at DIP
have improved the amount of choice for would-be buyers and investors in the Jebel Ali area."Cluttons
expects approximately 80,000 units to be completed in Dubai over the next three years if developers stick to their handover plans. But it is unlikely to lead to an oversupply situation.
"The corresponding growth in population, which usually averages five per cent per year, should see a further 441,000 new people added to the city. According to the Dubai Statistics Centre, the average household size in the emirate is 4.2 family members, which would translate into demand of roughly 105,000 units over the next three years," said Faisal Durrani, head of research at Cluttons.
If this scenario comes true, supply will fall short of demand. "It may appear that supply and demand are well-matched, particularly as 30 per cent to 40 per cent of the announced supply is likely to be delayed, or rephased, as has been the case historically. Our concern, however, remains centred on the fact that the vast majority of planned supply is designed to cater to the high-earning segment of the population."
Transaction volumes remained stable, with the number of deals during the first nine months of the year 4.6 per cent higher than the same period last year. The volume of villa transactions, however, slipped by 1.6 per cent over the same period to 874 deals between January and September 2017.
Overall, residential prices slipped by 1.9 per cent in the three months to the end of September, following on from the 1.5 per cent drop in Q2. The annual rate of change at the end of Q3 stood at -5.6 per cent.
The Dubai government is bringing in legislation for an affordable housing push in some of Dubai's core locations.
Durrani said: "The Dubai government's initiative to focus on affordable housing will help Dubai avoid some of the lessons learned by more developed cities around the world, especially with regards to curtailing the emergence of poorly connected, low-income neighbourhoods that are segregated from the rest of the city, as is the case in many other global metropoles.
"While exact details around the legislation are yet to be confirmed, we expect to see a balanced approach between the presumed establishment of quotas around the provision of affordable housing that is both built-to-rent and built-to-sell, so that both aspiring buyers and tenants, priced out of city centre locations, can benefit."