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Dubai: The latest house prices in Dubai continued to show signs that the property market is bottoming out, a local consulting firm said.
Despite suggestions by other industry experts that the era of lower rents and real estate values is not yet over, ValuStrat came out with a new report on Sunday stating that the market will likely start to recover during the second half of the year, with renewed investor interest becoming more evident.
The consultancy company regularly tracks property prices in key locations in Dubai. According to its own price index, the monthly growth rate of residential values has been “broadly stable” since July 2015.
While transactions at the Dubai Land Department (DLD) have indicated increased demand in certain locations, ValuStrat’s residential price index posted a 0.1 per cent decline to 97.9 index points in June compared to the months of April and May.
“Statistical analysis has shown further indications of an early recovery in some areas, signaling possible signs of a bottoming out in property values across [the areas monitored] during the course of the year,” ValuStrat said in a statement. There is also evidence from the market place that both investors and end users are now doing deals on properties in good locations and those that offer fair market prices.
Related link: Dubai real estate slowly wins back investors
“For the second quarter of 2016, DLD transaction volumes for the [areas covered by the price index] witnessed quarterly increases of 14 per cent for apartments and 7 per cent for villas,” said Haider Tuaima, ValuStrat research manager.
Jesse Downs, managing director of Phidar Advisory, had argued that there is still little activity in the residential sector amid the jobs slowdown and low oil prices. She said that softening demand will continue to put pressure on residential rents to drop to more affordable levels this year, giving some relief to tenants who are still spending a huge portion of their budgets on housing.
A separate analysis by Reidin showed that house prices did move a bit higher recently, with the sales price index registering an increase of 0.97 per cent in May 2016. A year on year comparison, however, showed a much more significant decline in values of 5.3 per cent.
Average prices for apartments increased by 1.05 per cent in May compared to a month earlier, while villa sales prices went up by 0.63 per cent during the same period.
Residential rents also registered a 1 per cent increase from March to May this year, but posted a 3 per cent decline between December 2015 and May 2016.