The third quarter 2018 Dubai real estate review issued by leading local consulting firm ValuStrat – reports that the third quarter ValuStrat Price Index (VPI) for residential properties showed declines decelerating to 2.9% since the previous quarter. This continued downward trend resulted in citywide capital value falls of 22.3% since the peak of mid-2014. Quarterly declines of more than 4% were registered in Jumeirah Islands, Business Bay, Palm Jumeirah (apartments), and Discovery Gardens. Capital values for villas in Palm Jumeirah and Al Furjan remained mostly flat as compared to Q2.
The third quarter 2018 VPI – Residential, displayed an overall 9% annual fall in capital values, with the quarterly decline decelerating to 2.9% when compared to the previous quarter. This downward trend resulted in 22.3% citywide capital value loss since the peaks of mid-2014. All established freehold locations monitored by the VPI witnessed price drops since the last quarter, ranging from 0.2% to 5%. Established areas that witnessed substantial off-plan sale transactions during the last three months included Downtown Dubai at 85% of sales being off-plan, Business Bay at 84% and Remraam 75%. Average ticket prices for off-plan homes fell 3.8% QoQ, whereas ready property ticket sizes jumped 9.5% QoQ, suggesting improved interest in prime properties.
“…our research has shown that this quarter saw increased investor focus on ready-to-move-in apartments and villas priced between 3 million and 5 million Dirhams causing the average ticket size to jump, …” said Haider Tuaima, Head of Real Estate Research at ValuStrat.
An estimated 12,332 apartments and villas, 27% of the total supply as expected at the start of 2018, have been completed YTD. 70% of these completions, amounting to 8,614 units, were located mainly in five areas: Dubailand, Jumeirah Village Circle (JVC), Dubai Silicon Oasis, International City phase 2/3, as well as Dubai Marina.
Overall residential asking rents fell 11% YoY, however, on a quarterly basis asking rents declined 5.1%. Compared to the same period last year, listed rents were down 11.1% for apartments and 10.2% for villas.
Dubai’s third quarter VPI – Office, which analyses the freehold office market in the most transacted locations in Dubai, stood at 80.7 points. This suggests that average capital values are 11.6% lower than last year. However, declines slowed to 2.3% when compared to previous quarter. Barsha Heights witnessed the highest annual drop of 15% and 4.2% QoQ, Jumeirah Lake Towers was second in line with losses of 13.3% year on year and 1% QoQ. Dubai International Financial Centre (DIFC) fell 2.1% YoY and 1.1% QoQ. Downtown Dubai also saw annual declines but was the only location monitored by the VPI where there was no change on a quarterly basis.
Office transaction volumes during the summer holiday period declined 10.1% when compared to the previous quarter and overall transacted office prices were 24.7% lower than last year, however, saw an increase of 2.9% QoQ. The median transacted price stood at AED 8,514 per sq m (AED 791 per sq ft). Business Bay was the most popular choice for office sales with a share of 43% followed by Jumeirah Lake Towers (JLT) with 32.5% of overall transactions.
As of July 2018, Dubai had a total of 86,506 hotel rooms and 24,826 hotel apartments. An estimated 1,704 rooms were added during Q3 from the opening of six hotels. The citywide occupancy rate was 76%, 1% lower when compared to the same period last year. For January-July period, Revenue per Available Room (RevPAR) declined 6.7% while Average Daily Rate (ADR) fell 5.4% YoY.
Industrial property prices remained broadly stable during Q3 2018. Prices were generally ranging between AED 1,938 per sq m to AED 4,306 per sq m (AED 180 per sq ft to AED 400 per sq ft) with high specification / quality built and modern cold storage facilities priced at the upper end. While industrial rents remained mostly flat in all locations, with rentals ranging between AED 296 to AED 538 per sq m (AED 27 to AED 50 per sq ft) with the exception of marginal quarterly decline of 1% seen in Al Qusais industrial area.
Declan King MRICS – Managing Director & Group Head Real Estate commented ‘… Whilst the third quarter is normally a quieter time in the Dubai real estate sector, with many people away during the summer holiday months, it will be interesting to see if early signs of a slow-down in price declines continue into Q4. Also, bearing in mind the impact off-plan launches have had on the city’s wider property market over the last year, we would hope that the forthcoming Cityscape Global event will see a more measured approach to new home launches in Dubai…’
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About ValuStrat
ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Due Diligence and Divestment services across a diverse range of industry sectors since 1977. Offices in the UAE, Saudi Arabia and Qatar serve over 800 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.
About the ValuStrat Price Indices
The ValuStrat Price Index for Dubai’s freehold office sector is constructed to represent the quarterly price change experienced by typical office space within Dubai. The ValuStrat Price Index for Dubai’s freehold residential sector is constructed to represent the monthly price change experienced by typical residential units within Dubai. The VPI uses a comprehensive weighted sample representing more than 90% of all property types across the city and is built by our expert RICS Registered Valuers
The latest in-depth 100+ page residential report that includes citywide analysis of 26 freehold districts, including the ValuStrat Price Index, transaction volumes, service charges, Price to Rent Ratios and Net Yields in now available to subscribers.
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