Residential property prices in Dubai continued to fall, extending the correction process that has been under way for quite some time.
While apartment sales prices in the first half of 2019 are 11.7 per cent cheaper than they were two years ago and dropped 3.9 per cent compared to second half 2018, villa prices have become 12.1 per cent cheaper than they were in 2017, according to data in the ‘Property Finder Trends’ report, released earlier this month.
Apartments for sale fared worse than rentals, with low to mid-single-digit percentage drops right across the country, the report said.
“The ongoing correction is expected to bring prices down further along with the rentals that have yet to see the bottom as overall residential stock in Dubai is expected to reach 637,000 units by the end of next year, an increase of 10 per cent,” said Meeran Najeeb, managing partner of Almas Real Estate Brokers.
Most experts believe a price correction and higher supply will promote Dubai as an affordable market, aside from offering residents and investors an opportunity to bargain a better property deal in one of the most popular and developed cities of the world. Analysts at Kamco Research said that the highest rental declines in second quarter was witnessed in the affordable housing category – compared to two years ago, apartment rents are more than 20 per cent cheaper.
The Property Finder Trends report said that for Dubai apartments, the median advertised price is Dh1,163 per square foot. Ras Al Khaimah apartments for sale had the biggest decline in prices in first half 2019, dropping 6.2 per cent to an advertised median price of Dh560 per square foot; exactly half the median advertised price in Abu Dhabi which dropped 4.4 per cent to Dh1,120.
Ajman, with a median square foot advertised price of just Dh269, is still by far the cheapest. Prices dropped 3.9 per cent in first half. Sharjah apartments held their value best in first half as they have done for the last couple of years. They declined modestly by 1.5 per cent during this half-year to a median advertised price of Dh475 per square foot. Villa prices in Dubai dropped 4.3 per cent to an advertised median price of Dh855 per square foot compared to H2 2018. They are 12.1 per cent cheaper than they were in 2017. New affordable off-plan offerings in Dubai South, Dubailand and Town Square were popular with buyers, said the report.
Villa communities in Dubai that experienced the biggest decline in sales prices in H1 2019 were Damac Hills (-8.2 per cent), Emirates Hills (-6.6 per cent), Green Community Motor City (-5.4 per cent), Dubai Silicon Oasis (-5.2 per cent), Al Furjan and The Villa (-5.1 per cent). Communities like Living Legends, District One in Mohammed Bin Rashid City, Mirdif, Green Community DIP and Palm Jumeirah Signature Villas recorded zero or a very marginal drop in villa sales prices.
Lynnette Abad, director of Data & Research, Property Finder, said that as new affordable villa communities are getting completed and handed over, there has been a migration to these communities from popular areas such as Dubai Marina. “Families are choosing to live a little further out in the suburban areas of Dubai in order to gain access to a larger property with outside space. We have also seen a large influx of renters converting to home buyers, especially in these new villa communities,” Abad said.
Apartment transactions in Dubai also saw a decline of five per cent but villa sales are up by 35 per cent while overall sales transactions are steady and in line with 2018.
“Dubai apartments remain the preferred property type, and although their year-on-year transaction numbers have declined, the value has increased. This is reflective of an end-user driven market. End-users tend to buy larger apartments and those in prime locations, while studios and 1-bed apartments that offer higher yields are preferred by investors,” said the report.
According to the report, Downtown Dubai saw the most apartment sales in H1 2019 at 1,586, of which 1,288 were off-plan transactions. Dubai Hills Estate (972 off-plan apartment transactions) and The Lagoons in Dubai Creek Harbour (853 off-plan apartment transactions), both Emaar developments, were also popular. Apartment communities in Dubai that witnessed the biggest sales price drop in H1 2019 were Al Sufouh (-10.5 per cent), Remraam (-9.6 per cent), Downtown Dubai (-7.4 percent), Old Town (-7.2 per cent) and Jumeirah Lakes Towers (-6.5 per cent). Mirdif, Jumeirah Village Triangle, Dubai South, Arjan and Al Furjan stayed resilient and resisted the price drop.