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CONSTRUCTION NEWS

Dubai's completed unit transactions up 22pc in Q4

Jan 9, 2019 6:59 PM

Dubai s residential sector in the final quarter of 2018 witnessed a continuation of the tough trading conditions experienced in the third quarter however due to increased affordability completed unit transactions...

Dubai’s residential sector in the final quarter of 2018 witnessed a continuation of the tough trading conditions experienced in the third quarter, however, due to increased affordability, completed unit transactions saw a 22 per cent increase in transaction volumes over Q3 and an overall 7 per cent uplift across 2018, according to leading international real estate services firm, Chestertons.

The average apartment sales prices fell by 5 per cent from the previous quarter whilst average villa prices softened by 3 per cent, stated Chestertons in its latest Observer: Dubai Market Report Q4 2018.  

Furthermore, year-on-year performance showed that apartment prices declined, overall, by 16 per cent and villas by 13 per cent.

In the rental market, rates are still favouring tenants as apartments saw a further 4 per cent decrease with a 3 per cent drop for villas from the previous quarter. This was a continuation of a trend which saw an overall 12 per cent annual decline in apartment rental rates and 8 per cent for villas.

“The real estate market recovery in Dubai continues to be hampered by the increasing excess supply being released to the market.

However, our research has highlighted 41 per cent of all residential transactions now relate to completed units, up 6 per cent from 2017, indicating a shift in buyers’ interests, with the trend set to gain further momentum in 2019 as developers offer attractive incentives and long-term payment plans,” said Ivana Gazivoda Vucinic, the head of consulting at Chestertons Mena.

In the sales market, Q4 continued the trend seen throughout 2018 as prices witnessed further declines in both the apartment and villa markets. In the apartment segment, prices in Dubai Sports City, International City and Jumeirah Village Circle (JVC) all fell by 9 per cent compared to the previous quarter, to Dh793 per sq ft, Dh516 per sq ft and Dh759 per sq ft respectively.

Downtown Dubai and The Greens fell by 8 per cent and 7 per cent respectively with prices now at Dh1,515 per sq ft in Downtown and Dh965 per sq ft in The Greens. In contrast, Dubai Marina remained one of the most resilient locations for investors and end users witnessing a decline of just 1 per cent, with prices now at Dh1,185 per sq ft, said Vucinic.

Annually, it was Discovery Gardens which saw the steepest decline, with prices dropping by 25 per cent year-on-year to Dh636 per sq ft. The most resilient apartment location was Dubailand with just a 5 per cent adjustment from the previous year.

In the villa sales market, Palm Jumeirah, once again, observed a further decline in Q4 with a 7 per cent decrease to Dh2,035 per sq ft. The Meadows and Springs remained unchanged from the previous quarter at Dh936 per sq ft while Arabian Ranches fell by just 1 per cent to Dh840 per sq ft indicating the prices in these particular communities may have bottomed out, she added.

In the rental market, apartments in Dubai Marina, Dubai Silicon Oasis, Dubai Sports City, Dubailand and International City, witnessed a 5 per cent decline in Q4, with a one-bedroom in Dubai Marina now available for Dh82,500.

Downtown Dubai, JLT, JVC and Dubai Motor City all declined by 4 per cent from the previous quarter with a one-bedroom in the former now available for Dh95,000, said the report by Chestertons.

Due to the increasing stock of smaller format and studio apartments, these units appear to be most affected by market adjustments with a year-on-year recorded drop of 16 per cent for studios and 12 per cent for one-bedroom units, it stated.

In the villa rental market, the highest Q-on-Q declines were witnessed in three-bedroom units with average rental declines of 4 per cent. In Al Furjan, which fell by 7 per cent, on average, a three-bedroom unit is now available for Dh138,000.

In Arabian Ranches and JVT, average rental rates fell by 4 per centand 3-bedroom units are now available for Dh160,000 and Dh150,000 respectively. On Palm Jumeirah, rental rates fell by just 1 per cent with a three-bedroom villa renting for Dh300,000.

“From a rental perspective, Dubai continues to be a tenant-friendly market, with many making significant savings by renegotiating terms and price with current landlords or moving to a cheaper location within their current district or relocating to a new community,” remarked Vucinic.

The addition of new stock and limited new demand continues to place pressure on landlords with many of them competing on several fronts to retain or attract new tenants with multiple cheques, rent-free periods and in some cases agency fees being covered, she noted.

According to Vucinic, this could result in landlords taking advantage of the holiday let market, which has been legal in Dubai since 2016.

“With demand for annual contracts weakening and rents continuing to fall, short-term holiday rental could prove very lucrative, especially in popular locations, particularly as we edge ever closer to Expo 2020,” she added.-TradeArabia News Service

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