Dubai’s residential sector enjoyed a comparatively strong second half of 2020, supported by an increase in completed property sales and continued tenant demand across more-established villa communities, according to leading international real estate services firm, Chestertons.
Villa sales prices recorded a comparatively moderate 3.6% decline in 2020, with the overall annual fall eased by a robust final quarter, stated Chestertons in its latest research.
The findings, revealed in the latest Observer: UAE 2020 Review & 2021 Outlook, showed that while the total value of residential property sales fell by almost 14% over 2020, to AED55.46 billion from AED64.34 billion in 2019, completed property sales gained pace over the second half of last year, reaching AED21.67 billion, a 35.5% increase from AED 15.99 billion seen in H2 2019.
Apartment sales price declines were more pronounced, falling 9.5% year-on-year, with continued unit completions continuing to place downward pressure on values, said the statement.
In the rental sector, villa rents witnessed an annual fall of 5.3%, while apartment rents fell by 12.4%, it added.
Chris Hobden, the Head of Strategic Consultancy, Chestertons Mena, said: "Dubai’s residential sector enjoyed a comparatively strong fourth quarter, with sales activity continuing to gain pace since mid-last last year. While residential rents continued to see steady falls, the pace of price declines eased in the final months of 2020, with the market-wide average bolstered by several villa communities seeing minor uplifts in achieved prices."
"Overall, we expect to see modest declines in both average prices and rents this year, with ongoing unit completions likely to hamper performance. Price movements will increasingly vary by location and property type though, and we expect healthy demand for completed villas, across more-established residential areas, to continue into 2021," he affrf.
On an annual basis, Chestertons said the villas at Palm Jumeirah and The Meadows/The Springs saw the lowest price falls, with prices declining by just 2.1% and 2.7%, respectively.
Chestertons said in the apartment sales sector, prices continued to fall, although the rate of decline eased in Q4. The largest annual price declines were witnessed in Discovery Gardens, with prices falling by 13.5% annually to AED498 per sqft, from AED576 per sqft in Q4 2019, it stated.
Dubai Sports City and Motor City also saw comparatively sharp declines Y-o-Y, falling by 13.3% and 12.8% respectively. Prices averaged AED600 per sqft in Dubai Sports City, with Motor City prices decreasing to AED510 per sqft, it added.
Business Bay and Dubai Marina witnessed more moderate declines over 2020, with prices falling by just 3.7% to AED973 per sqft, and 4.9% to AED980 per sqft, respectively.
“With work-from-home policies continuing across parts of the private sector, and tenant demand for larger residential accommodation likely to remain strong, we expect villa rents to continue to outperform the wider residential average over the coming year,” said Hobden.
For apartments, downward pressure on rental rates continued due to the economic impact of Covid-19, causing a year-on-year fall of 12.4%. The highest annual declines were seen in The Views and Discovery Gardens, at 16.3% and 16.2% respectively, with two-bedroom units in The Views averaging AED100,000 over Q4.
In Dubai Motor City rates fell by 15.9%, with three-bedroom apartments standing at AED98,500, down from an average of AED105,000 per annum in Q4 2019, stated the expert.
Studio units saw the sharpest fall over 2020, at 14.8%, followed by one and two-bedroom units, which fell by averages of 13.2% and 11.8%, respectively. Three-bedroom units declined annually by 9.2%, it added.
According to Chestertons, 2020 witnessed a significant slowdown in the number of new off-plan sales launches, with developers largely refraining from commencing new projects since Q1 2020.
A total of 6,115 residential units started construction last year, compared to 18,650 in 2019 and 28,905 in 2018, it stated.
"We expect new off-plan sales launches to be limited in early 2021, with developers broadly reassessing project plans in the wake of an unprecedented 2020," remarked Hobden.
"We predict, however, that new launch activity will pick up as the year progresses, with Expo 2020 set to provide a backdrop to showcase new projects," he added.
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