New report indicates continued property market declines as more residential projects come into the pipeline in 2016
Real estate consultancy Asteco has released its latest Dubai report indicating continued pressure on the city's property market at supply widens.
The report flags the impact of delayed project delivery in 2015 and a large pipeline for 2016, highlighting a demand slowdown and continued low oil prices as an indicator of continued market declines this year.
A total of 13,500 apartments and 800 villas were added to Dubai's residential real estate supply in 2015, with a further 22,000 apartments and 7,700 villas scheduled to be delivered in 2016, says the report.
Downward rental rate pressure is likely to continue through to 2017.
Residential sales have also declined, with villa sales prices down year-on-year by 11 per cent and apartments by 8 per cent.
Villas on Palm Jumeirah recorded price declines of 13 per cent over the year, dropping to AED 2,475 per square foot on average and The Meadows was also down 15 per cent to AED 1,150.
End-users, rather than investors, were the predominant buyers of villas and townhouses, with a clear preference for smaller 2, 3 and 4 bedroom units, rather than large villas.
New communities such as Mudon and Arabian Ranches Phase 2 saw improved levels of activity, offering better-priced yet good quality alternatives to some of the more established areas, according to the report.
At the high end of the apartment market, Jumeirah Beach Residence was down 16 per cent to AED 1,370 per square foot and apartments on the Palm Jumeirah dropped 14 per cent to AED 1,720 per square foot on average.
Though Al Barsha recorded a 9.2 per cent increase for three-bedroom villas, villa rentals were generally down 9 per cent on average year-on-year.
"For property owners, adjustments in terms of rental expectations and payment flexibility will have to be made," said John Stevens, Managing Director, Asteco.
"And, as usual in cases of increased supply, better quality, well managed or value-for- money properties will be able to achieve higher occupancy levels than others."
With supply handover slower than anticipated in 2015, apartment rental rates remained broadly stable over the year, dipping just 1 per cent on average, although Asteco recorded disparities between different areas.
The commercial office sector fared slightly better despite significant new space of 500,000 square metres coming online in 2015 and 1.1 million square metres set to be delivered in 2016.
Stevens said: "The majority of new office supply entering the market this year will be strata-owned buildings in popular office areas like Business Bay and Jumeirah Lake Towers. Sales demand is expected to come primarily from SME level end-users."
Asteco is a major regional and international real estate services firm and the largest property services company in the United Arab Emirates.
|Media outlet||The Big 5 Hub|
|Country||United Arab Emirates|
|Cover Page||M C|