Property Sales Prices And Rental Rates In Dubai To Fall Further This Year Says Chestertons Report

The addition of new stock, tough macroeconomic conditions and moderate population growth are set to place further pressure on property sales prices and rental rates in Dubai, according to the latest Observer: Dubai Q1 2018 report from leading international property company Chestertons MENA.

Overall sales prices for apartments and villas softened by 5% quarter-on-quarter, denoting the highest quarterly drop in sales prices for apartments since 2014, while rental rates for apartments and villas fell by 2%, with the Greens, a standout performer in recent years, falling by 4%. The villa market, notably Palm Jumeirah also fell by 4%.

“As a result of falling sales prices, many end users took advantage of the increased affordability of completed units, as evidenced by the 10% increase in recorded transactions from the previous quarter. This was to the detriment of off-plan transactions, which although they still dominate the market, volume declined by 19%,” said Ivana Gazivoda Vucinic, Head of Consulting and Valuations and Advisory Operations, Chestertons MENA.

The most popular areas in terms of completed unit transaction volumes were Dubai Marina (449 units sold), Dubai Sports City (396) and International City (274) whereas the majority of off-plan units transacted were located in Business Bay (748), Meydan City (581) and Jumeriah Village Circle (519).

From an apartment sales perspective, Business Bay and Silicon Oasis saw the steepest declines at 9% with prices dropping to AED1,178 and AED 729 respectively per sqft. Dubai Sports City, Jumeriah Village Circle and The Greens witnessed a drop of 8% with prices declining to AED957, AED824 and AED1,095 respectively per sqft. Dubai Land proved to be the most resilient community with a drop of just 1%, owing to the relative affordability of the area.

In the villa sales market, all communities experienced falling prices, with Palm Jumeirah and the Meadows and Springs recording capital depreciation of 8% to AED2,205 and AED988 per sqft respectively. The Lakes dropped by 6% to AED1204 per sqft while Arabian Ranches fell to AED942.

“The number of new launches dropped during the quarter, which appears to be a strategic decision by developers in a bid to stave off empty units or sales at reduced-price points. However, with a substantial pipeline of stock due to be released ahead of Expo 2020, sales prices are expected to drop further this year,” added Vucinic.

In the rental market, Q1 declines were evenly spread across different unit types, contrasting with previous quarters where the declines were most prominently felt in larger units.