Residential Property in Dubai Continues to Fall

By HopwoodHouse, 07 March, 2017

In the year leading ending with the third quarter of 2016, Dubai's residential prices fell by a total of 7.4% following a fall within that quarter of 2.6%. Compared to the peak levels seen in 2008's third quarter, the average residential property in Dubai has now fallen in price by 26.7%.

The general downward trend that has lately defined the residential property for sale in Dubai is still ongoing; the most recent Cluttons report shows. In its analysis, the property specialist reveals that both rents and values continue to drop, albeit not universally, and predicts that the emirate has further to go along this trend before things bottom out or turn around.

This is not true across the board, and some areas of Dubai do indeed seem to have bottomed out now. For the most part, however, Dubai is still dropping and is likely to keep doing so for a while. Cluttons' latest report predicts several quarters at least before things turn around.

Indeed, while the average figures outlined above are hardly encouraging, the report shows that there is a very considerable amount of variation across the market. Some of the worst performances have very much been concentrated at the luxury end of the market. A lot of the depreciation seen in this sector comes from poor performances in places like the Lakes, down 11.1% over the year, and The Palm Jameirah, down 11.9%. However, these figures weighed heavy on the average for this end of the market. Overall, villas in Dubai were down 2.6% over the third quarter of last year and 7.8% over the full year up to that point, but these figures mask a lot of variation in the market.

There was a lot more stability in many of the emirates less expensive locations. The likes of Jumeirah Village and The Green Community made it through 2016's third quarter with prices essentially unchanged. Areas which are located around the middle of the price spectrum even managed an increase, albeit one so modest that in real terms prices should be considered essentially unchanged. Many such districts managed an increase of 0.1%.

Apartments also fell in the third quarter of 2016, and at their fastest rate for several years. The three months of that quarter saw apartments lose 2.5% of their value on average, and the behaviour of apartment prices was far more consistent than that experienced by villas.

Rents were similarly down in the third quarter of last year, although the rate at which they were dropping had slowed considerably compared to the quarter before. The second quarter of the year had seen a 4.4% drop in rents, but this was followed by a much smaller decrease of 1.5% in the third quarter. Year-on-year, this put rents down by 8%. Once again, there was a lot of variation. Villas were down by as much as 9.4% year-on-year, whereas apartments were only down by 5.8% annually after holding steady for the third quarter.

Another important trend highlighted by the report was low transaction volumes, a result of affordability issues and investors sentiments that are generally lacking in confidence. Across the market as a whole, the third quarter of 2016 saw sales down by 21% year-on-year, with apartments leading the descent.