Property prices and rentals in Dubai are set for a further decline throughout 2016 as the emirates economy continues to adjust to softening global conditions says US real estate consultancy Cluttons.
Cluttons Dubai Spring 2016 Residential Property Market Outlook, shows that after falling by an average of 3.1 per cent during 2015, residential values fell by an additional 2.2 per cent during the first quarter of 2016. The drop is the largest quarterly decrease in average residential values in five years and the seventh consecutive quarterly decline.
Weve been carefully monitoring the declining residential values over the past two years, but the persistent headwinds to local and global economic growth are continuing to erode overall demand and capital values are still softening, albeit at a slightly quicker rate, says Faisal Durrani, head of research at Cluttons.
Villa prices have fallen 3 per cent since the end of 2015, meaning they are now nearly 7 per cent down on this time last year. During 2016, Cluttons says a further decline of around 5 per cent is likely on average, with some villa submarkets likely to see price falls of up to 7 per cent cent.
Apartment values demonstrated greater resilience during the first quarter, with marginal declines across the board. Apartment values on average declined by a marginal 0.8 per cent over the last two years, reflecting greater resilience in this segment of the residential market thus far. That said, there has been a reduction in the number of transactions registered during the first quarter of 2016, suggesting there may be a lag before apartment values start to slip. Reidin data shows that apartment transactions fell from 2,787 in the fourth quarter of 2015 to 2,349 in the first quarter of 2016. With that in mind, we are expecting to see apartment values decline by 3 per cent to 4 per cent this year as transactional activity slows further.
For new product being delivered to the market, Cluttons data shows that, overall, the supply pipelines expansion appears to have slowed. During 2016, Cluttons expects 7,058 units to complete, followed by a further 10,299 deliveries in 2017. The number of handovers is expected to rise to 16,026 in 2018, before dipping back to 9,786 in 2019.