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Despite price declines and relatively stable transactions, developers remain bullish with a significant number of launches seen throughout the first half of the year, according to Cavendish Maxwell's Property Monitor Index report.
It took note of around 24 developments during the period, of which almost 80 per cent were launched in the second quarter, resulting in approximately Z900 additional units to the market, all set to be delivered over the next three years.
"While the majority (82 per cent) of those units are apartments, it is interesting to note that town houses made up 17 per cent," said the report. "We have seen a general increase in town house developments across Dubai as these more reasonably priced units are proving attractive to families."
The majority of the developments launched in the second quarter have been in secondary locations such as Dubai Silicon Oasis, Mohammad Bin Rashid City and Dubai World Central, which will extend the borders of the city inland over the next few years as they become more established and populated.
The report also said that initiatives by developers to encourage single-unit purchasers alongside flexible payment plans have opened up the off-plan market to a new end user and investor market. "This is a significant step for an emerging market and is encouraging first-time buyers who may previously have been in the wait-and-see category."
Meanwhile, the Cavendish Maxwell Residential Market Survey shows that agents remain optimistic about sales in the third quarter. More than half the agents surveyed predicted an increase throughout the quarter, as well as predicted increase in instructions.
Rental market sentiment for the third quarter points towards an increase in tenant demand and new landlord instructions, while agent predictions are divided between those who believe rental expectation will increase and those who believe there will be no change.
Cavendish Maxwell believes the Dubai residential market was relatively stable in terms of price movements during the second quarter, recording an overall decline of 1.7 per cent.
"This can be seen as an improvement from the 2.3 per cent drop recorded in the first quarter," it said.
"While this might suggest a slowing in the general rate of decline, the extent of the compression will be better established throughout the third quarter, leading up to Cityscape Dubai, where activity preceding and during the event is typically a good gauge of market sentiment and outlook.
"Although some agents have witnessed a slight increase in transactions in the second quarter, these are most likely to have been supported by a number of bulk deals and off-plan transactions."
Apartment prices in the second quarter showed a marginal decline of 2 per cent, according to the survey.
"Prices in areas such as Dubai Marina and Jumeirah Beach Residences declined the least at about 1 per cent, while prices in more secondary locations such as Dubai Motor City and Discovery Gardens declined the most at 3 per cent."
Villa prices declined by 2.4 per cent in the second quarter compared with the 3.2 per cent fall in the first. Prices in established end user villa communities such as the Springs and Meadows fell the most at 6 per cent and 4 per cent respectively.
Although rental prices and occupancy levels remain stable in these communities, demand has recently seen a shift towards secondary locations such as Jumei-rah Village Triangle, Green Community and Al Furjan as buyers look for more value.
Overall apartment rents in the second quarter remained stable across the major freehold areas of Dubai, with prime and popular locations such as Dubai Marina, Palm Jumeirah and Downtown Dubai still showing strong occupancy levels and commanding the highest rents.
"We have seen rents increase in Motor City throughout the second quarter, partially due to a shift in tenant demand towards secondary locations in Dubai as rents remain high in more central locations."
Villa rents in the second quarter declined marginally at around 1.4 per cent as landlord rental expectations have dropped over the past three months.
Rents in locations such as The Springs, Jumeirah Village Triangle and Jumeirah Islands have remained largely unchanged in the second quarter.
Source: Property Weekly