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, stated the report.
According to Chestertons, these 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.
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 Dh907 per sq ft in The Greens and Dh706 per sq ft in Dubailand and Dh 700 per sq ft in Dubai Motor City, stated the property expert.
The Views and Downtown Dubai witnessed the highest declines of 9% and 7% resulting in prices of Dh1,090 per sq ft and Dh1,401 per sq ft respectively, which is likely a result of oversupply. At the value end of the scale, International City witnessed no movement and prices remained at Dh481 per sq ft, it added.
Nick Witty, the 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,” he noted.
“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,” he added.
“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 Dh60,000 per annum. Dubailand and Discovery Gardens saw average declines of 8% with a typical two-bedroom renting for Dh51,000 and Dh75,000 respectively.
The Views, The Greens, Dubai Sports City and JLT recorded an average softening of between 1% and 3%, with prices of Dh120,000, Dh100,000, Dh68,000 and Dh89,000 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 Dh110,000 and in Business Bay for Dh100,000.
“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,” said 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 Dh210,000, Dh180,000 and Dh160,000. 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%, she stated.
The value of transactions completed in Q2 rose by 31% from Dh5.64 billion in Q1 2019 to Dh7.37 billion in Q2, with Downtown Dubai the most popular location in terms of transaction value at Dh1.13 billion, stated Witty.
“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,’ she added.
Source: Trade Arabia News Service