Capital values in Dubai's residential property market have dropped to their lowest level in four years, according to a new report.
said in its Winter Property Market Outlook published on Wednesday that residential prices slipped by 1.9 percent quarter-on-quarter in the three months to the end of September and were 5.6 percent lower than the same period a year earlier.
It said the emirate's residential market "remains in a state of flux", with performance depending on the location and price band in question. Comparing current unit prices to those at the peak of the market in the third quarter of 2008, it found that Burj Khalifa apartments had fallen in value by 71.2 percent, apartments in Discovery Gardens by 38.5 percent and in Jumeirah Lakes Towers by 31.4 percent.
Prices in some districts have come under pressure recently because of the number of newer, cheaper units coming onto the market, Cluttons
In a press release accompanying the report, Murray Strang, head of Cluttons
Dubai, explained: "Arabian Ranches has faced stiff competition from nearby Nshama, while Al Furjan and the second phase of units at DIP
(Dubai Investments Park
) have improved the amount of choice for would-be buyers and investors in the Jebel Ali area.”
The report said that there is potential for residential prices to start bottoming out in the second half of next year, but added that "much will depend on the yet to materialise 'Expo 2020 effect', the strength of the US dollar and a slowing in both the rate of delivery and the type of new residential schemes announced, with 'affordable housing' being key to helping the market stabilise," it said.
Figures produced by ReidIn/Global Capital Partners for the first 10 months of the year stated that the volume of residential transactions completed this year had increased by 32 percent, but off-plan deals now dominate - outselling completed homes by a rate of two-to-one. (Read more here
The growing pipeline of off-plan homes under development is also leading to fears of oversupply. A Residential Sentiment Survey published by Core Savills in September stated that only 34 percent of respondents believed Dubai's property market is showing signs of recovery. Eight out of ten of respondents who did not believe the market looked likely to recover cited fears of a potential oversupply in the residential market by 2020. (Read more here
(Writing by Michael Fahy; Editing by Anoop Menon)Further reading:
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