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Dubai: Housing rents in Dubai fell further during the first three months of the year as more residential units were delivered and property market conditions continued to soften, a leading real estate broker said.
Leasing rates dropped by 5 per cent, while house prices dipped by 10 per cent compared to the same period last year, according to JLL Middle East and North Africa.
Property analysts, however, said that the rental decline is moving at a slower pace as the market moves closer to the bottom of its cycle. A total of 2,200 new apartments, villas and town houses were added into the market during the first quarter of the year, taking the total residential supply to 458,500 units.
“The downturn in rental and sales indexes continued in Q1, but the rate of decline has reduced, suggesting the bottom of its cycle,” JLL said in its report.
ValuStrat said that more supply will be added in the next few months, citing that the total supply of residential apartments and villas to be completed this year could amount to 33,662 units.
“However, as in recent years, this volume may be subject to significant downward adjustment as the year advances and project delays are experienced,” said ValuStrat.
As for house prices, the consulting firm’s price index showed a 3.5 per cent decline in property values. The company suggested there are “minute indications” that the market is bottoming out.
"It’s no longer a matter of ‘if the market recovers’, rather it’s a matter of ‘when the market recovers’, and with this in mind, many end-users are moving to reduce their high annual rents by replacing that with easier monthly mortgage payments," Haider Tuaima, ValuStrat, head of research, told Gulf News earlier.
JLL attributed the decline in property values to the stronger US dollar and weaker buying power of real estate investors in the region, caused primarily by the decline in oil prices.
Source: Cleofe Maceda, Senior Web Reporter, gulfnews.com