The latest Dubai Property Review Q3 2016 report by leading real estate consultancy Asteco has revealed increasing pressure is being placed on landlords as budget conscious tenants continue to place emphasis on downgrading to smaller units or relocating to cheaper communities to get better value for money.
Apartments in Jumeirah Village Circle and Dubai Sports City saw rates increase by 2% and 3% respectively ? the latter also recorded the highest growth over the year, averaging 13% as demand for affordable housing increased. The mid to high end segment also saw some movement, with Business Bay recording a 5% decline due to new supply being handed over and budget conscious tenants looking for alternatives.
John Stevens, Managing Director, Asteco, said: "Although rental rates have remained relatively stable this quarter we are seeing a definite shift to more affordable areas such as Jumeirah Village and Dubai Sports City where rents are cheaper and an increasing number of amenities are coming on line as communities reach critical mass."
Apartment rental rates in Jumeirah Village ranged from AED40,000 to AED55,000 for a studio and from AED125,000 to AED165,000 for a three-bedroom unit. In mid to high end areas such as Jumeirah Lakes Towers studios ranged from AED55,000 to AED75,000 while three bedroom apartments were available from AED120,000 to AED180,000. The high to luxury end of the market with developments such as Downtown Dubai saw studios priced from AED75,000 to AED105,000 while three bedroom units varied from AED175,000 and AED300,000.
In the villa market rents ranged from AED130,000 to AED185,000 for a two-bedroom villa in Arabian Ranches, AED125,000 to AED160,000 for the same size in Jumeirah Village. In the Springs a two-bedroom villa is priced between AED130,000 and AED145,000, for a three bedroom the cost varies from AED165,000 and AED220,000.
Villas in Jumeirah and Umm Suqeim recorded a significant year-on-year decline of 19% and 12% respectively, which was attributed to substantial new supply and an increasing number of budget-conscious tenants.
Stevens said: "Given that tenants have a wide range of options to choose from, they are more likely to negotiate with their landlord; and if their requirements are not met, they will vacate. Whilst this was noticeable in Jumeirah and Umm Suqeim, this trend has spread throughout the wider Dubai market.
"With more handovers expected in the next few months, we anticipate villa rental rates could come under further pressure."
According to Reidin, sales transactions were down by 22% compared with Q2 2016 and with many off-plan property launches at competitive rates, there is a possibility that developers could face some pressure in the near future. A significant increase in activity in the area closest to the new airport was recorded in the last few months, such as the launch of Emaar's Urbana at Emaar South and various projects in Dubai South.
Stevens said: "Most of these recent releases had significantly lower asking prices compared with current market prices as developers expand into the affordable segment, by reducing unit sizes and launching projects in secondary locations."
After dropping nearly 20% year-on-year, sales rates for apartments in Dubai Marina remained stable and it was a similar picture for DIFC, The Greens and JBR.
"With ample options available in the market, at various prices and attractive payment plans, buyers have significant choice. They also appeared to be better informed compared to previous years, as they researched their options, pricing, payment plans and developers' track record," said Stevens.
In terms of villa sales, interest was predominantly for more affordable and mid-priced units, typically priced between AED 2 to AED 5 million. As a result, established communities such as The Springs and Mudon recorded 5% and 1% increases respectively over the quarter.
Apartment sales prices in International City ranged from AED500 and AED900 per square foot, the Greens ranged from AED1,000 and AED1,600 per square foot and in Dubai Marina prices ranged from AED850 and AED2,400.
Villa sales prices varied from AED960 to AED1,380 per square foot in the Meadows, AED750 and AED1,500 per square foot in Jumeirah Park and between AED1,440 and AED3,500 per square foot on the Palm Jumeirah.
The commercial office sector in Dubai saw a 24% reduction in transactions compared to Q2 2016, although this was 12% higher than the corresponding period last year.
On the leasing front, Ibn Battuta continued to perform well with rates from AED 145 per square foot for small units and from AED 85 per square foot for larger shell and core space.
Land sales rates reached as low as AED 60 per square foot on the GFA in areas such as Majan, Jumeirah Village and Arjan.
Stevens said: "With more supply announced and due to enter the market over the next few months, there seems to be little potential for both rental and sales prices growth, except within select developments."
For more details, please visit www.asteco.com
|Media outlet||Emirates Business Newspaper - Website|
|Country||United Arab Emirates|
|Cover Page||M C|