Rental yields in affordable housing projects range from 8% to 10%
Property prices in Dubai are becoming affordable having declined 5 per cent in the first quarter 2016 compared to the same period last year, according to Asteco.
"This market has moved favourably towards the buyer as prices drop and cash investors and end-users find themselves in a strong negotiating position. Buyers are definitely considering their investment options as the market appears to be bottoming out and sellers seem prepared to take a more realistic view on pricing," said John Stevens, Managing Director, Asteco, in a statement.
Dubai Marina, Palm Jumeriah and Downtown Dubai topped the most transacted areas in value terms though prices in these locations were down 4 per cent each in Marina and Downtown and 6 per cent in Palm Jumeirah.
International City registered the highest number of transactions as prices rose one per cent, pointing to the demand for affordable housing. International Media Production Zone, and Jumeirah Village notched quarter-on-quarter gains of 4 per cent and 5 per cent, respectively.
The villa market saw sales prices declining on average 6 per cent, compared to same period last year and 2 per cent when compared with fourth quarter, 2015. As buyer interest at the higher end of the market was "limited" communities such as Jumeirah Golf Estates, The Villa and larger sized villas in Arabian Ranches saw sales prices drop by 14 per cent, 11 per cent and 13 per cent, year-on-year.
The consultancy said that newly launched properties with more affordable price points and payment plans were attracting investment interest and are selling "very well."
"The reputation of the developer is also playing a major role as investors and end-users want to be certain that their properties will be delivered as agreed and the required infrastructure and community facilities completed," Stevens said.
Despite prices coming down, the rental market has not seen significant declines with properties still offering high yields compared to international markets.
In affordable areas, the rental yields have been in the range of 8 to 10 per cent a year, while in the prime area the range is between 6 and 7 per cent a year.
A number of developers are offering guaranteed returns, ranging from 8 to 10 per cent a year on their off-plans projects in order to lure buyers. Over 140 new projects have been launched in the past 24 months.