Half of the freehold apartment locations in Dubai, UAE, have seen a gradual price recovery in the third quarter (Q3) of the year, while most freehold villas saw a continued marginal softening in values, according to a new report.

Increased quarterly residential sales prices, coupled with lower overall quarterly transaction volumes, indicates a cyclical trough stage for the residential market, said the third quarter 2016 real estate review issued by leading local consulting firm ValuStrat.

The third quarter in-depth residential ValuStrat Price Index (VPI) report analyses 26 freehold locations in Dubai on a monthly basis. It shows that mostly mid-affordable locations initiated the price recovery process, with quarterly increases ranging from 2.3 per cent to 4 per cent, the exception being high-end Downtown Dubai, which also witnessed a clear trend of positive correction over the last six months.

 The third quarter 2016 VPI displayed an overall marginal 0.6 per cent annual decline in values.

However, the monthly growth rate of residential values has been broadly stable for the past 15 months, but marginally declined this quarter, which was expected, said Haider Tuaima, ValuStrat research manager.

The July residential VPI registered 97.7 index points while August and September both dipped by 0.1 per cent to 97.6 and 97.5 index points respectively.

“Even though sales transaction volumes came down in Q3, which is expected during the quieter summer months, DLD transacted sale prices for residential apartments have increased noticeably at 6.6 per cent annually and 5.2 per cent on a quarterly basis,” said Tuaima.

Residential investment yields have compressed slightly, as median asking rents were 8 per cent lower than Q3 last year and 7.1 per cent lower than Q2 this year. The highest net yields were registered in mid-affordable locations - ranging between 6.5 per cent to 7 per cent.

For 2016, the latest estimated total supply of residential apartments and villas to be completed amounts to 15,191 units. Ten off-plan housing projects were launched in Q3 to add more than 2,000 units to the residential pipeline by 2020.

Office transaction sales prices fell by 8.3 per cent since last year but remained stable since the last quarter. Median asking rents for office space fell 9.3 per cent annually, and 4.9 per cent since the previous quarter. The median asking rent for office space was AED 1,076 per sq m (AED 100 per sq ft).

This quarter saw an estimated additional 140,000 sq m (1.5 million sq ft) of gross leasable area (GLA) delivered in prime retail malls as a result of the inauguration of phase one of the Italian themed Outlet Village mall by Meraas, located in Jebel Ali, and Majid Al Futtaim’s My City Centre Al Barsha.

The total number of hotel rooms and hotel apartments as of August 2016 in Dubai has crossed the 100,000 mark, with 100,211 units.

Average occupancy during period January to August was 76 per cent, compared to 77 per cent during the same period last year. With 5 per cent more hotel rooms since last year, year-on-year (YoY) average daily rate (ADR) for the same period dropped by 10.8 per cent and hotel revenue per available room (RevPAR) fell 11.3 per cent YoY. – TradeArabia News Service