Upcoming supply is expected to exert continued pressure on Dubai’s residential property market. An additional 10,000 units are set to be delivered this year and a further 70,000 before Expo 2020, according to real estate services firm Chestertons.
The volume and value of transactions for completed units dropped by 11 per cent and 13 per cent respectively. However, this was eclipsed by the decline in off-plan transactions, with a 31 per cent decline in volume and 33 per cent decline in value. This sector is, however, still dominating the market with several incentives, including five-year post-handover payment plans, registration fee waivers and guaranteed rental returns.
“The lower number of off-plan launches, coupled with the increased affordability of completed units, has motivated some buyers to consider properties that are available to move into immediately,” said Ivana Gazivoda Vucinic, head of consulting and valuations and advisory operations, Chestertons Mena.
Apartment and villa rents have declined four per cent and three per cent respectively in the third quarter while sales prices for both property classes declined by six per cent, with the trend expected to continue into 2019.
“Without a significant decline in construction activity, a boost in population and short-term economic stimulus, it is unlikely the residential market will have any respite for the remainder of the year, resulting in an expected supply/demand equilibrium scenario in the next three to five years, due to the forecasted property pipeline,” added Vucinic.
Smaller apartments witnessed the biggest adjustments in the rental market. Studio apartments in DIFC and Downtown Dubai both recorded declines of 11 per cent, falling to Dh67,000 per year and for the same period, Discovery Gardens notched the greatest fall, a decrease of 13 per cent for a studio, which can now be leased for Dh35,000 per annum, according to Chestertons.
In the villa rental market, the highest Q-on-Q declines for 3-bedroom units were witnessed on the Palm Jumeirah (13 per cent), Jumeirah Islands (6 per cent) and The Meadows (5 per cent), with a three-bedroom unit now renting at Dh302,000, Dh235,000 and Dh193,000 respectively. Elsewhere, Jumeirah Golf Estates and The Lakes remained flat at Dh245,000 and Dh183,000, while Arabian Ranches, The Springs and Victory Heights declined by 1 per cent and are now available annually for Dh167,000, Dh153,000 and Dh147,000 respectively.
“Greater choice from an affordability perspective is contributing significantly to rental declines in smaller units, particularly for apartments. This trend is also being replicated in the villa market with units, which may have been previously unattainable for many tenants, now within budget. This has been compounded by landlords offering a range of special discounts to retain and entice new and existing tenants,” said Vucinic.
From a sales perspective, prices continued the downward decline witnessed throughout 2018. From an apartment sales perspective, Dubai Silicon Oasis and Dubailand proved to be the most resilient in Q3, witnessing a decline of just two per cent. In contrast, Discovery Gardens witnessed the steepest decline at 13 per cent.
In the villa sales market, Q-on-Q Palm Jumeirah observed a 5 per cent decline. The softening witnessed in Q2 intensified in Q3 with Arabian Ranches and Jumeirah Park both witnessing 8 per cent drops while The Lakes decreased by 4 per cent. The Meadows and The Springs, which remained flat in Q2, declined by 6 per cent.
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