Dubai residential market showing “signs of stabilisation”
The Dubai residential real estate market is showing signs of renewed confidence as transactional volumes remained stable between Q1 2009 and Q2 2009 according to Jones Lang LaSalle MENA’s Q2 2009 Dubai Residential Market Snapshot.
While average prices have continued to fall (by around 24% in Q2), the rate of decline is now falling and there has been a convergence between asking and achieved prices. There has also a lower rate of rental decline than before, with the average rent for two bedroom apartments falling by 15% in Q2, compared with a 22% decline in Q1/2009
Note: Convergence of Asking & Achieved Prices
Decline in average prices has reduced to just 6% between Q1 and Q2 2009
Since Q2 2008, achieved prices have typically been around 20% lower than asking prices, but this gap has narrowed to around 7% in Q2 2009
Asking prices have fallen more sharply than achieved prices during 2009, suggesting price stabilization
New residential supply continues, with 22,400 residential units expected to be handed over in 2009, in spite of over $24 billion worth of residential projects being put on hold or cancelled.
On the demand front, transactional volume remained stable between Q1 2009 and Q2 2009 in comparison to the 58% decrease between Q2 2008 and Q2 2009.
Craig Plumb, Head of Research at Jones Lang LaSalle MENA added: “The stabilisation of transactional volumes is an important indicator, which reflects improved confidence among investors. The narrowing gap between asking prices and achieved prices is a further indication that the market is beginning to stabilise, albeit at significantly lower levels of pricing than those seen earlier in the year.”
“While there have been a large number of projects delayed or cancelled, there remains a significant level of new supply, with around 22,400 residential units expected to be completed across Dubai in 2009”.