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The majority of agents surveyed in the Cavendish Maxwell Residential Survey predict apartment and villa prices and rents to remain unchanged in the third quarter this year. In terms of transactions, 58 per cent expect new enquiries to increase, while 48 per cent expect an increase in the number of agreed sales.
Around 42 per cent of those surveyed also believe new seller instructions will remain the same during the third quarter. Apartment prices in Dubai declined up to 1 per cent during the second quarter and an average of 6 per cent over the last 12 months, according to a Cavendish Maxwell report.
Prices have declined nearly 12 per cent since highs in the second quarter in 2014. The report also noted that locations such as Business Bay and International City have witnessed 12-month declines higher than 7 per cent.
“Transaction activity is expected to remain muted during the third quarter in line with past trends,” said Manika Dhama, Research Manager at Cavendish Maxwell. “Developers are promoting unique payment plans and the ‘affordable’ tag continues to be aimed at first time buyers. This, however, is unlikely to ramp up buying activity in the short term in this target segment given the restrictive mortgage-lending requirements and overall liquidity in the market.”
In Abu Dhabi, price declines in investment zones were lower than in Dubai, with an average drop of 0.2 per cent in the second quarter and 4 per cent on a year-on-year basis. Locations such as Saadiyat Beach Residences and Al Raha Beach had higher 12-month declines than the market average. Investment yields for villas in Al Raha Gardens and Al Reef areas continue to remain attractive at 6.7 per cent on average. There is a wide gap between demand and supply for high-quality villas, keeping price declines in Abu Dhabi investment zones at a much lower rate than in Dubai.
Apartment rents in Dubai declined at similar levels as prices, thus investment yields remained largely unchanged in the quarter, according to the report. “Renters have been able to negotiate discounts on new leases, while tenants have found it harder to negotiate lower rents on renewal,” said Dhama. Locations such as Jumeirah Lakes Towers, Dubai International City and Jumeirah Golf Estates have posted 12-month declines of between 1-3 per cent.
In Abu Dhabi investment zones, apartment and villa rents declined by 0.5 per cent on average. Studios and two- bedroom apartments registered higher declines than one-bedrooms.
Source: Property Weekly