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Dubai's real estate sector witnessed further stabilization and a slowing down of rental rates and sales prices, as the downward trend continued for the third quarter in a row, according to Asteco's third-quarter market report.
Apartment and villa rental rates dropped slightly by 2 per cent and 3 per cent respectively against second-quarter figures. Sales prices also showed a nominal decline of 1 per cent and 4 per cent respectively.
However, year-on-year growth remained positive overall with sales prices increasing 31 per cent and 17 per cent for apartments and villas respectively.
Beneficial to the market
"For the first time since 2012 we have seen both residential rental rates and sales prices decline as a result of a natural adjustment to ongoing new supply entering the market," said John Stevens, Managing Director, Asteco.
"It's a wait-and-see scenario on the part of buyers right now, and we believe that sales prices may soften further with more new supply on the way,” said Stevens. "In the short term, a price reduction will be beneficial for the market, as it will assist in unlocking demand from the middle-income segment."
In terms of apartment sales, Jumeirah Lakes Towers and Downtown Dubai were the top performers in the third quarter, with rates increasing 37 per cent and 35 per cent respectively versus the same period last year. Prices per square foot in these areas are now up to Dh1,500 and Dh3,000 respectively.
In contrast, prices in areas such as Jumeirah Village are around Dh800 to Dh1,050 per square foot, down 3 per cent quarter-on-quarter, but up 32 per cent year-on-year.
Villas in the AI Furjan development and on Palm Jumeirah recorded per square foot sales rates of up to Dh1,150 and Dh4,000 respectively, with a 4 per cent quarter-on-quarter drop for AI Furjan and no movement for Palm Jumeirah, but still registering 38 per cent and 55 per cent year-on-year growth respectively.
In terms of residential rental rates, Discovery Gardens and International City registered a 7 per cent drop following previous year-on-year record growth levels of 23 per cent and 40 per cent respectively. The report highlighted the possibility of further rental increases for these communities, which could prompt further relocations to the northern emirates.
In comparison, some of Dubai's prime areas, such as Downtown Dubai, have remained relatively stable, while Palm Jumeirah recorded 3 per cent quarter-on-quarter growth.
“The popular Dubai Marina, which has suffered from long-term construction and traffic congestion woes, saw a 2 per cent decline since the second quarter, as tenants look to relocate to more accessible areas,” said Stevens.
Source: Property Weekly