Dubai’s Residential Market to Remain Buyer and Tenant-Friendly

Press release
Published July 10th, 2019 - 06:33 GMT
Nick Witty, Managing Director, Chestertons MENA
Nick Witty, Managing Director, Chestertons MENA
Highlights
The declines are a result of continued oversupply to the Emirate’s residential real estate market, where an anticipated 47,502 apartments, villas and townhouses are set to be completed this year

Dubai’s tenants and end-users are continuing to benefit from reduced apartment and villa sales prices, as well as a softening rental market, a trend expected to continue for the remainder of the year, according to the latest research from leading international real estate services firm, Chestertons’ Observer: Dubai Market Report Q2 2019.

The declines are a result of continued oversupply to the Emirate’s residential real estate market, where an anticipated 47,502 apartments, villas and townhouses are set to be completed this year, almost double of that delivered in 2018.

Nick Witty, Managing Director, Chestertons MENA, said: “In the short term, oversupply will continue to dampen the value of Dubai’s residential real estate market. This is being compounded by several developer incentives including five-year post-handover payment plans, registration fee rebates, freezing property service charges and guaranteed rental returns. Similarly, landlords are offering prospective tenants rent-free periods, multiple rent cheques, and even short term leases.

“The bottom line is Dubai will continue to be tenant and home buyer-friendly for the foreseeable future, until demand has caught up with supply.”

In the sales market, prices for both apartments and villas witnessed a decrease of 4% in Q2. From a villa perspective, Palm Jumeirah remained the most resilient, softening by 1% to AED1,967 per sqft. In contrast, The Lakes witnessed the highest price decline at 6% to AED1,038 per sqft while declines in The Meadows/Springs dropped 5% to AED854 per sqft followed by Jumeirah Park softening by 4% to AED827 and 3% in Arabian Ranches to AED833 per sqft. This could be attributed to the fact that many older villa communities are showing signs of fatigue and are in need of refurbishment. This is resulting in a higher level of demand for newer properties.

In the apartment sales market The Greens, Dubailand and Dubai Motor City showed relative levels of resilience, only witnessing a 2% decrease from the previous quarter to AED907 per sqft in The Greens and AED706 per sqft in Dubailand and AED 700 per sqft in Dubai Motor City.  The Views and Downtown Dubai witnessed the highest declines of 9% and 7% resulting in prices of AED1,090 per sqft and AED1,401 per sqft respectively, which is likely a result of oversupply. At the value end of the scale, International City witnessed no movement and prices remained at AED481 per sqft.

“To remain competitive, we have seen developers becoming increasingly innovative. In partnership with Dubai Multi Commodities Centre (DMCC), Emaar is offering buyers of its Executive Residences in Dubai Hills Estate a free three-year renewable business license, a free three-year renewable family residency visa as well as 100% business ownership for some industry sectors,” said Witty.

In the rental market, there was a more marked weakening compared to Q1, with average apartment rates declining by 5% and villas by 8% Q-on-Q. As a result, many tenants have seen an increase in potential property options.

Dubai Silicon Oasis saw the largest decline with a typical two-bedroom apartment now 12% below the Q1 price at AED60,000 per annum. Dubailand and Discovery Gardens saw average declines of 8% with a typical two-bedroom renting for AED51,000 and AED75,000 respectively. The Views, The Greens, Dubai Sports City and JLT recorded an average softening of between 1% and 3%, with prices of AED120,000, AED100,000, AED68,000 and AED89,000 respectively for a two-bedroom apartment.

Established communities including Dubai Marina and Business Bay, which in the past have weathered price reduction to a certain extent, witnessed declines in Q2 of 5%, with a two-bedroom apartment in the Marina now available for AED110,000 and in Business Bay for AED100,000.

“As such, Jumeirah Village Circle, Business Bay, Dubailand and Mohammed Bin Rashid City is where the largest rent reductions are likely to be felt going forward due to the expected supply in these locations,” added Witty.

In the villa rental market, Jumeirah Islands, The Meadows and Arabian Ranches, all witnessed declines of 11%, on average, with prices for a typical four-bedroom now AED210,000, AED180,000 and AED160,000. Palm Jumeirah was the most resilient location in the villa rental market, denoting a 2% decline which was closely followed by The Springs which fell by 3%.

The value of transactions completed in Q2 rose by 31% from AED5.64 billion in Q1 2019 to AED7.37 billion in Q2, with Downtown Dubai the most popular location in terms of transaction value at AED1.13 billion.

“Despite price declines across the board, the Emirate’s property market is displaying some positive sentiment as a result of increased transaction volumes in the completed unit and off-plan sectors. The increase in transaction values alludes to the fact end-users are still active and purchasing homes in Dubai,’ concluded Witty.

Background Information

Chestertons

Chestertons is the London and international residential property specialist. We know our business and our markets like no one else and every year help thousands of clients and customers buy, sell, let, rent and manage their homes and investments.

Contact Information

40 Connaught Street, Hyde Park,
London, W2 2AB.

PR Agency

Shamal Marketing Communications

Shamal Marketing Communications
Arjaan Al Sufouh Office Tower
PO Box 502701
Dubai Media City
Dubai, United Arab Emirates
Fax number
+971 (0) 4 427 8703

PR Contact

Contact Name
James Lakie

PR Rates

Buy credits to publish your articles on Al Bawaba Biz here

You May Also Like

Subscribe

Sign up to our newsletter for exclusive updates and enhanced content