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The Dubai Land Department has recently released interim transactional data, which reveals that apartment sales prices fell by 1.5 per cent during the first five months of the year, while non-prime villas fell by 2.9 per cent. Lease rates for the latter also decreased by a marginal 0.6 per cent and apartment lease rates by 2.4 per cent. So while there's some validity in the news that prices are falling in apartment transactions, in some out-of-town property transactions and villa and apartment leases, the prime residential properties we have on our books are showing no such decreases.
For prime sales above Dh10 million, from the whole of last year until June, we've seen a large number of transactions taking place. Our figures show that the villas sold in Emirates Hills in the first half of 2015 are as many as those sold over last year. We have noticed a very slight reduction in average prices per square foot from Dh2,775 to Dh2,040 in the prime residential properties that were sold recently.
In great demand
In terms of value for money for these luxury properties, this drop of Dh735 is insignificant, given that their sizes vary significantly and dilute the average price.
When we look at how the market is faring in terms of prime residential areas, we see that prime properties continue to be greatly in demand. This is the case because of their superior location in well-established, highly desirable areas, the quality of design, build, architectural significance and specifications, and the quality of their surroundings.
There is also fierce competition to own such properties from both Emiratis and expats, which inevitably pushes the price higher. Take a look at Palm Jumeirah, for example — it's a unique environment in which to live, and the luxury villas on the fronds are some of the most exclusive and sought-after real estate in the city, if not the world. Interest in property there remains extremely high due to the prime location and amount of money people have already invested in established properties.
Prices for prime villas reached an average of Dh6,000 per square foot last year, which is almost three times the average price of prime property in other areas of Dubai. So far in 2015, we've seen indications that if sales volumes continue at the current level, there will be more successful sales this year than in 2014.
On top of this, the Palm has already seen three sales exceed the Dh70-million mark this year, which gives us an indication that the market for exclusive villa there remains strong. Our figures clearly show that not only are sales holding steady but average prices look set to continue to shadow last year's prices, with only a marginal drop in the average.
In some of the city's most highly desirable areas such as Dubai Marina, The Lakes and Arabian Ranches, which have established communities and few properties regularly coming on to the market, prices are actually increasing.
A positive outlook
Dubai Marina, for example, has seen an increase of Dh873 so far this year, compared to last year's prices. Similarly, the cost of properties in Arabian Ranches has risen by Dh234. This may not be as much of an increase as we have seen on the Palm, but we must take into account the differentiation between the style and standard of the properties in the two locations along with size.
While smaller-scale properties such as apartments in non-prime locations are facing fierce competition because of the increase in supply—there are around 25,000 units due to be completed this year alone — prime residential property is valued for its scarcity and the level of luxury, which owners expect as standard. The economic issues in Europe (such as the fallout from Greece's negotiations with its European creditors), ongoing sanctions on Russia and the drop in oil prices (which are gradually regaining value as expected) may account for some of the fall in sales and prices in the non-prime market, but our clients remain unaffected by such influences. We can confidently say that prime is definitely not in decline.
Source: Gregory Lewis, Special to Property Weekly