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The first three months of this year showed little or no movement in Dubai’s residential sales market.
However, renewed focus on Dubai’s potential and possibly pent-up demand for affordable housing is spurring local government, investor and developer activity, according to our latest quarterly report.
Following on from H2 2014 trends, overall apartment and villa sales prices continued to fall, registering a respective 3% and 2% decline in Q1.
This, as the Middle East’s largest independent full service real estate company highlighted the shift in market preference away from high-end luxury to value-for-money projects located in completed or almost-complete developments.
There have been a number of launches in recent months that have proven extremely popular in terms of take-up.
There were moves by the Dubai Municipality to augment the existing reasonably priced rental stock, with the allocation of over 100 hectares of land in Muhaisnah 4 and Al Quoz 3 and 4 to developers to build affordable housing for rent to those earning between Dh3,000 and Dh10,000 per month.
Projects launched during Q1 2015 included the 1,000 three and four-bedroom townhouses at Zahra and Hayat in the new Town Square master-planned development by Nshama.The development is located south of Emirates Road, where a three-bedroom is available from Dh1 million.
Other releases are Acacia Heights with its 479 apartments at Shaikh Mohammed bin Rashid City, and Reef Residence, including 378 apartments, in Jumeirah Village Circle.
These highlight the continuous expansion of the city further inland as developers target the more affordable segments of the market, with Damac having led this trend with its Akoya Oxygen project.
Value for money has become more important than property prestige.
With a noticeable decline in buyers from Russia and the CIS countries due to worsening economic situation, this is prompting new opportunities.
We are seeing more GCC investor interest in reasonably priced properties, including off-plan projects specifically designed for investors.
This is led by Saudi Arabia and the UAE.
According to Reidin data, transaction volumes for completed apartment properties were down by 12% in Q1 2015, with completed villas falling by 35% compared with Q1 2014.
Interestingly, we also finally saw a degree of willingness on the part of premium property vendors to reduce their asking rates.
But with limited demand in this segment, transaction activity has been relatively low.
Location preferences saw buyers in Dubai Marina opt for completed properties with off-plan projects such as Marina Arcade, Sparkle Towers and Marina Gate registering subdued levels of interest despite lower pricing bands.
Asteco expects interest to gather momentum as completion dates loom.
The 35% year-on-year decline in villa transactions in Q1 2015 was not unexpected due to the quantum of new supply, with the stabilisation of prices in popular developments such as Arabian Ranches and Dubai Sports City, and a 9% quarter-on-quarter drop in sales prices registered at The Meadows and The Springs communities.
There was limited movement in the residential rental market with only minor adjustments in select areas.
Demand has been centred on established communities and affordable products, augmented by the decision of many tenants to renew their contract rather than relocate.
Source: John Stevens, Managing Director, Asteco.