Price index indicates average annual house prices in emirate decreased by 10.6%.
House prices in Dubai continue to be more affordable with the ongoing correction in the sector, leading to a more than 10 per cent annual decline across a broad spectrum of residential communities.
The Dubai House Price Index for February 2019 indicates that the average annual house price in Dubai decreased by 10.6 per cent, with some communities registering even higher price declines.
Discovery Gardens, Jumeirah Islands, Arabian Ranches, Emirates Living and Dubai Sports City were some of the communities that registered annual price declines of more than 11 per cent on average, according to the index released on Sunday by Property Monitor from Cavendish Maxwell.
As predicted by pundits, the steady downturn is expected to sustain through 2019 before stabilising in 2020 with recovery expected to start in 2021.
Savills Middle East has forecast a potential decline of another five to 10 per cent in residential real estate prices in Dubai in 2019 before the market hits the bottom. The predicted decline this year is on top of the six to 10 per cent decline Dubai residential property prices witnessed in 2018.
P.N.C. Menon, founder and chairman of Sobha Realty, said the Dubai House Price Index is extremely positive for prospective investors. “We are confident that the 10.6 per cent decline in average house price in Dubai in February 2019 will enthuse real estate buyers and spur the current sales momentum.”
A credit analyst with S&P Global Ratings said residential real estate prices could decline by 10 per cent to 15 per cent in 2019 and a further five to 10 per cent in 2020. “In this case, we see no upside for Dubai residential real estate prices in 2021, as we expect it will take a while for the market to absorb oversupply,” said Sapna Jegtiani.
The index shows that month-on-month, the price decline for February is 1.8 per cent, 0.1 per cent higher than in January. House prices in the three months up to February were 4.5 per cent lower than in the previous quarter. Overall, the average house price in Dubai decreased to Dh 2.6 million.
The Dubai House Price Index tracks residential sales prices for the same selection of properties from September 2015 to date. As of February 2019, apartment and villa/townhouse prices have declined by 16 per cent and 18 per cent, respectively, compared to their prices of Dh2.1 million and Dh5.6 million in September 2015.
According to February’s index, the average apartment price remained relatively stable at Dh1.8 million, with only a marginal change from January, while the average villa/townhouse price decreased to Dh4.6 million. The rate of off-plan apartment transfers remained high in February, as has been the case over the past year.
However, the total volume of off-plan apartment transfers decreased by nearly 24 per cent over the first two months of 2019, compared to the same period in 2018. The volume of villa/townhouse transfers nearly doubled over the same period, said the Property Monitor report.
Dubai residential property prices have been declining over the past few years after peaking in the second half of 2014, and are approaching levels last seen at the nadir of the 2009-10 property crash, according to S&P.
Since 2014, Dubai property prices and rents have fallen 25 per cent to 33 per cent in nominal terms, according to industry data. S&P expects prices to fall further, coming close to levels seen at the bottom of the last cycle in 2010.
According to Asteco, as additional supply will result in continued pressure on rents, the rate of decline is expected towards the end of 2019. Generally low rents are also expected to help tenants move up in terms of size, quality and location. The additional supply, combined with handovers previously scheduled for 2018, will see an additional 30,000 residential units and 3.6 million sqft of office space brought to the market.
All rights reserved to the initial publisher for Khaleej Times
Collected and published by Arms &McGregor International Realty® editorial team. Get in touch with us at [email protected]