Dubai apartment and villa sales prices declined 2% and 3% respectively in Q1 2015, reveals real estate management company Asteco in their latest report released today.
Key highlights of Dubai real estate market for Q1 2015
– Dubai property market to focus on value for money, says Asteco
– Strong demand witnessed for nearly 2,000 affordable homes in Q1, focusing the low-income groups
– Despite premium property vendors reducing their asking rates, demand was poor with less number of transactions
– Dubai Marina and Downtown Dubai remain most sought after locations
– Dubai office market had a stable first quarter in terms of sales values and rental rates
The first three months of this year showed little or no movement for Dubai’s residential sales market. However renewed focus on Dubai’s potential and possibly pent-up demand for affordable housing is spurring local government, investor and developer activity, according to Asteco’s latest UAE Property View – Q1 2015 Report.
Following on from H2 2014 trends, overall apartment and villas sales prices continued to fall, registering a respective 3% and 2% decline in Q1, highlighting the shift in market preference away from high-end luxury to value-for-money projects located in completed or almost-complete developments.
There have been a number of launches in recent months that have proven extremely popular in terms of take-up. The report stated the moves by Dubai Municipality to augment existing reasonably priced rental stock, with the allocation of over 100 hectares of land in Muhaisnah 4 and Al Quoz 3 and 4 to developers to build affordable housing for rent, to those earning between AED 3,000 and AED 10,000 per month.
Projects launched during Q1 2015 included the release of 1,000 three and four-bedroom townhouses at Zahra and Hayat in the new Town Square master-planned development by Nshama, located south of Dubai Bypass Road, where a three-bed is available from AED 1 million; Acacia Heights with its 479 apartments at Mohammed Bin Rashid City and Reef Residences including 378 apartments in Jumeirah Village Circle.
“This highlights the continuous expansion of the city further inland as developers target the more affordable segments of the market, with Damac having led this trend with its Akoya Oxygen project,” noted John Stevens, Managing Director at Asteco Property Management.
“Value-for-money has become more important than property prestige, and with a noticeable decline in buyers from Russia and the CIS countries, due to the worsening economic situation, this is prompting new opportunities, and we are seeing more GCC investor interest in reasonably priced properties, led by Saudi Arabia and the UAE, including off-plan projects specifically designed for investors,” he added.
According to Reidin data, transaction volumes for completed apartment properties were down by 12% in Q1 2015, with completed villas falling by 35% compared with Q1 2014.
“Interestingly, we also finally saw a degree of willingness on the part of premium property vendors to reduce their asking rates, but with limited demand in this segment, transaction activity has been relatively low,” said Stevens.
Location preferences saw buyers in Dubai Marina opt for completed properties with off-plan projects such as Marina Arcade, Sparkle Tower, and Marina Gate registering subdued levels of interest despite lower pricing bands, although Asteco expects interest to gather momentum as completion dates loom.
The 35% year-on-year decline in villa transactions in Q1 2015 was not unexpected due to the quantum of new supply, with stabilisation of prices in popular developments such as Arabian Ranches and Dubai Sports City, and a 9% quarter-on-quarter drop in sales prices registered at The Meadows and Springs communities.
Al Furjan and Jumeirah Park also declined by 7% and 5% respectively, due to the large volume of properties currently for sale in both communities; and, at the very top-end of the market, Palm Jumeirah saw prices decline in Q1 2015.
There was limited movement in the residential rental market with only minor adjustments in select areas, with demand centered on established communities and affordable products, augmented by the decision of many tenants to renew rather than relocate.
High-end apartments in Dubai Marina and Downtown Dubai remain popular with secondary locations such as Dubai Sports City, also attracting good demand from middle-income residents as the community becomes more established.
“For villa rentals, the limited supply of stock in the ever-popular Jumeirah/Umm Suqeim area was good news for Al Barsha, and we saw increased interest here, driven also by location accessibility to schools and the city’s major attractions,” said Stevens.
The office market witnessed a stable first quarter in terms of sales values and rental rates with strong enquiry levels from new companies looking for small units for trade license purposes effectively a mirror of Q4 2014 activity.
There were no significant changes in the sales sector and Business Bay and Jumeirah Lake Towers remained the most transacted communities, representing over 80% of all office transactions.