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Dubai’s residential property values have shed most of the premium they had put on at the peak of the upturn in June 2014, with average prices now hovering to what they were during January last year. This is according to the newly created ValueStrat Price Index, which also found that the correction was most pronounced at JBR and Downtown. The Palm also saw some of this, the ValuStrat report adds.
On the rental side, the findings suggest that there was some respite for Dubai’s residents, dropping 2.2 per cent in the last six months. But the bad news for them is there was a 1 per cent increase over the last three months.
But the burden of high rentals has been running for a much longer period than that — ValuStrat’s estimates place average rental gains in the city to be around 25.6 per cent in the last 24 months. Clearly, corrections are not happening in the rental space, and that’s where the crux of the issue lies in the overall Dubai property market.
The ValuStrat index is not built entirely on official transactional data. And for a valid reason too.
“When we analyse transactional data in Dubai, one of the challenges is that the information is based upon pricing that may have been agreed months or even years before,” said Haider Tuaima, Research Manager.
“In a fast-changing property market this means it may already be out of date. Additionally, it is not always possible to filter the statistics into usable components … Or we may just find the sample sizes are too small to extract valid findings from.”
The ValuStrat model involves a predefined sample of villas located in 10 areas as well as apartments in 16 areas across Dubai. The locations are determined by calculating the highest frequency of transactions for each area within a citywide database of 24,500 records over a two-year period.
“The villas and apartments are actual units with clearly defined specifications, such as floor area, number of bedrooms, views, height and so on,” according to a ValuStrat statement. “Specific weights are then applied based on asset class, quality and location.”
Source: Manoj Nair, Associate Editor, gulfnews.com