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Dubai’s Real Estate Market Is Expected To Face Further Challenges

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Total transaction volume was down 21.7 percent from Q3 2019.

Despite a clear rise in property sales during the third quarter of 2020, Dubai’s real estate market is expected to face further challenges in both the rental and sales market, according to new research from Chestertons.

The international real estate services firm highlighted that increased sales activity in the third quarter, which rose by 50 percent compared to Q2, was largely attributed to pent up demand, along with developer promotions offered to clear built but unsold inventory.

Apartment prices fell 3.4 percent during the quarter, an increased rate of decline from the previous quarter, while villa sales prices witnessed a marginal fall of just 0.2 percent. In the rental market, apartment rental rates fell by 3.6 percent, whereas villas saw declines of 1.2 percent.

Chris Hobden (pictured above), head of strategic consultancy, Chestertons MENA, said: “Dubai witnessed a clear increase in transactional activity during the third quarter, building on a recovery seen during the final month of Q2, following the easing of Covid-19 restrictions.

“However, transaction volumes remain lower annually, and we expect both prices and rents to face further downward pressure over the final quarter of 2020. The ongoing economic impact of Covid-19, and a likely reduction in the emirate’s population, both key drivers of Dubai residential prices, are set to hamper market performance.”

Average Dubai property selling price rebounds in Q3

In the sales market, average apartment prices have fallen by  11.4 percent year-on-year while villa sales prices saw a more moderate fall of 5.8 percent.

“Average villa prices performed comparatively well over the third quarter, with the pace of decline tapered by broader price stability across several locations and, in the case of Palm Jumeirah, an uptick in the average achieved sales price,” said Hobden.

In Dubai’s rental market, apartment rates declined by 3.6 percent in Q3, with all areas once again showing falls in average rental rates, with Covid-19’s economic impact a determining factor while villa rents proved more resilient, falling by just 1.2 percent and 5.6 percent on a quarterly and annual basis, respectively, with agents reporting an apparent uptick in villa enquiries since the easing of lockdown restrictions in May.

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“While developer incentives played a part in supporting sales, pent up second quarter demand, and delays in the transactional process seen during lockdown, were also significant factors in boosting third quarter figures,” said Hobden.

“We expect that Q4 transaction numbers will provide a more reliable indicator of Covid-19’s market impact, and the extent of Dubai’s market recovery,” he added.

Where prices are falling fastest in Dubai in Q3:

  • Dubai Sports City – average prices fell by 5.5 percent to AED621 per sq ft
  • Dubai Silicon Oasis was the only other location to see a quarterly fall in average prices above 5 percent, reaching AED540 per sq ft, representing a 5.3 percent drop
  • Locations witnessing more moderate declines in Q3 included Dubai Marina and The Greens, with prices falling by just 2.4 percent and 2.5 percent to AED985 per sq ft and AED815 per sq ft respectively
  • Average apartment prices in The Views and Business Bay declined by 2.7 percent to AED1,022 per sq ft and AED970 per sq ft respectively
  • Villa prices on Palm Jumeirah was the only location to witness a price increase, up by 2.2 percent from AED1,820 per sq ft to AED1,860 per sq ft
  • Jumeirah Park saw prices hold steady over Q3, at AED720 per sq ft, having seen a modest decline of 0.7 percent the previous quarter
  • Arabian Ranches and The Lakes both witnessed quarterly declines of less than 1 percent to AED787 per sq ft and AED975 per sq ft respectively.
  • The Meadows/The Springs saw the highest quarterly decline at 2.5 percent, with average prices falling to AED795 per sq ft from AED815 per sq ft in Q2

Source: Arabian Business

(This story has been published from a wirefeed without modifications to the text. Only the heading has been changed)

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