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Estate agents in Dubai seem to be in the grips of a bearish sentiment. A significant 46 per cent among their ranks feel that apartment values in Dubai could drop by up to 5 per cent in the first three months of the year, while another 5 per cent reckon the decline to be more than 5 per cent.
Thirty-three per cent, meanwhile, are keeping their fingers crossed that values would remain the same during the first three months, according to a poll conducted by the real estate consultancy Cavendish Maxwell.
With villa prices, 34 per cent of agents suggest a less than 5 per cent softening during the period, with 9 per cent insisting it could be higher. Another 43 per cent believe the status quo at the end of the fourth quarter of 2015 will be maintained.
Dubai have already experienced an average 6 per cent dip in the 12 months ending the fourth quarter of 2015? Or should they wait for the anticipated further drops?
With no clear-cut answers, it adds to the state of flux in the Dubai property market. Another factor relates to exactly how many new homes will be added to Dubai’s existing stock this year.
The ballpark figure suggests 30,000 units could be added this year — “which may be subject to potential delays”, according to Cavendish Maxwell. There are valid reasons for the scepticism — last year Dubai was supposed to absorb around 20,000 new homes. But the actual delivery came to around 8,800 units, with 70 per cent being apartments, according to Cavendish Maxwell. There is now a question mark over whether the delayed units will see handover this year.
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Among existing freehold residential communities across Dubai, apartments in Discovery Gardens, International City and Motor City had the maximum drops by 9-10 per cent, based on Cavendish Maxwell estimates. This is for the 12 months from the fourth quarter of 2014.
The upscale high-rises at Dubai Marina, the Downtown, Business Bay and JBR had dips between 4-6 per cent during the same period, while the Shoreline Apartments on the Palm averaged a 6 per cent drop. When it comes to villas, values were down by 8 per cent on average over 12 months, with those at The Meadows and Springs lower by 12 per cent and 18 per cent. Among the emerging villa communities, units at Jumeirah Village Triangle were lower by 10 per cent.
Factbox: Limited new supply coming up in Abu Dhabi
There is a yawning gap between the actual need and the expected new supply of new homes that Abu Dhabi will see in the near term. Cavendish Maxwell’s new report suggests only 14,600 will be added to the emirate’s investment zones between this year and 2018.
More than 60 per cent of the anticipated supply is to be delivered in 2017. Last year, around 2,700 units were delivered, primarily at the new towers on Al Reem Island and the upscale residences cropping up on Saadiyat Island.
Over the last 12 months, apartment prices in Abu Dhabi dropped by an average of 3 per cent, a much slower rate than that in Dubai.
Source: Manoj Nair, Associate Editor, gulfnews.com