Dubai property slowdown continues in Q2
Dubai, July 7, 2014
The residential sales performance in Dubai saw a continued slowdown in the second quarter of the year, with only a marginal growth of six per cent and three per cent for apartments and villas respectively, according to an Asteco report.
The latest Asteco market report, however, anticipates renewed interest and activity in the third quarter.
The first half activity was marked by sector stabilisation and consolidation as the market continued to absorb the rapid growth witnessed last year, it said.
The interest shifted to peripheral communities such as Jumeirah Village, Dubai Sports City and Dubai Silicon Oasis, as many prospective purchasers remained priced out of the more popular areas of the city such as Downtown Dubai and Dubai Marina, according to the report.
John Stevens, managing director, said: “We recorded positive growth rates of around 10 per cent in Q2 for these areas, but at the same time there was a decline in interest in the previously popular affordable communities of Discovery Gardens and International City, which only registered minimal growth, indicating that they are now topping out price-wise and any further growth will take them out of the affordable bracket.”
The sellers who raised their prices following the Expo 2020 announcement are intent on maintaining their position, which has resulted in a reduction in transaction levels, especially for higher priced properties within established communities, he said.
The emirate has also seen a raft of recent new launches including Dubai Properties Group projects such as Manazel Al Khor in Culture Village, Rahat Villas at Mudon, and 200 new units at Remraam; and Damac’s NAIA Hotel and Hotel Apartments, 34 premium Fendi Villas at Akoya Drive, and two hotel apartments at Jumeirah Village.
Emaar’s new launches included the Opera Grand, the first residential development in the Opera District at Downtown Dubai, and Danube’s inaugural UAE project, the 171-townhouse Dreamz community at Al Furjan.
Meanwhile, Downtown Dubai and Jumeirah Beach Residence were top performers in terms of apartment sales, both up by 11 per cent to Dh3,300 ($898) and Dh2,000 per sq ft respectively while Dubai Marina and Downtown Dubai led year-on-year growth at 62 per cent and 52 per cent respectively.
Jumeirah Village also showed 46 per cent year-on-year growth with an increase of Dh300 to touch Dh1,100 per sq ft. However, properties in Dubai Silicon Oasis and Dubai Sports City are currently changing hands for Dh800 per sq ft.
Victory Heights and Palm Jumeirah were the communities that led villa sales with an eight per cent and more moderate three per cent increase, taking the per sq ft sales price to a ceiling of Dh1,450 and Dh4,000 respectively. Palm Jumeirah recorded a 55 per cent increase over the last 12 months while the newer Al Furjan community jumped by 44 per cent with properties now selling at Dh1,200 per sq ft.
“We anticipate that post the summer months, there are likely to be several new project announcements that will test demand in the market, giving buyers new opportunities to invest,” said Stevens.
The rental market was dominated largely by demand from new arrivals into Dubai, with apartment rates increasing by four per cent during the period and villas by five per cent with growth of up to 10 per cent witnessed across Dubai.
“With rents increasing steadily since 2013, many existing tenants have elected to remain where they are and absorb the rent increase, as indicated by the Rera rental index, rather than start from scratch and incur the cost of moving, agent commissions etc,” said Stevens.
The apartment rental rates in Jumeriah Beach Residence grew the most during the period where the annual rental rate for a two-bedroom unit increased by 10 per cent boosted by the release of the Al Bateen Residences.
Meanwhile, the villa rental rates grew by five per cent on average, with the Jumeirah location witnessing the highest growth of 12 per cent (40 per cent year-on-year).
The Jumeirah Village saw an 11 per cent increase in Q2, which is 20 per cent year-on-year, due to its affordable positioning, with a three-bedroom townhouse typically achieving rates from Dh155,000 to Dh185,000 per annum.
The office leasing in Dubai was relatively slow compared to the previous quarter with Dubai Investment Park and Dubai Internet City being the areas most in demand, with an overall market average rental rate increase of just two per cent.
The office sales, however, flat-lined even though a major transaction was concluded by Dubai’s first real estate investment trust (REIT) with the Dh600 million-plus purchase of more than 15 vacant office floors in Index Tower, at DIFC.
The report has predicted an increase in enquiries and transactions post summer, supported by ongoing economic improvements and activity on the part of companies budgeting for the year ahead, and those expanding or relocating and in the market.
“We expect the main beneficiaries of this increase in demand to be the quality single-owned office buildings in prime business locations such as DIFC, Sheikh Zayed Road and Dubai Media and Internet City,” added Stevens. - TradeArabia News Service