Residential property price falls in Dubai have been more pronounced than rental rate changes, with values down 4% in the third quarter of 2018, the latest index report shows.
Prices for villas fell by 13% over the quarter and apartment prices were down by 14%, according to the Asteco Dubai real estate report.
In the lettings sector apartment rents were down by 3% and villa rents down by 3% quarter on quarter. On an annual basis, they fell by 11% and 9% respectively.
The report explains that a slowdown in new project launches, meant that there was an emphasis in the third quarter was on completed properties available directly from developers, or offered in the secondary market.
A relatively new trend are initiatives such as rent to own schemes and crowdfunding to stimulate the market and tap into, what Asteco believes, is a significant amount of pent-up demand from end users and/or first-time buyers.
In addition, real estate professionals and participants have been increasingly vocal in urging the UAE Central Bank to lower existing loan to value ratios to facilitate home ownership for those unable to afford the current mortgage deposit requirements.
‘Although no such changes have yet been announced there appears to be a consensus among many that these reforms would provide the stimuli needed to boost the real estate market,’ the report says.
‘With the 2018 Dubai Cityscape around the corner, it will be interesting to see the extent of new project launches and how developers plan to entice Investors, whether with proven schemes or by offering new and improved incentives and payment terms,’ it added.
In the rental market, locations with high handover volumes recorded the sharpest rental rate declines and a significant rise in tenant turnover and the report points out that wider economic uncertainties resulted in many residents downsizing, or to seek value for money properties in less established areas.
Conversely, many tenants continued to take advantage of the abundance of choice and decreasing rents to upgrade to larger units, better quality specifications and/or more popular locations and rental rates are expected to come under further pressure this year, a trend that is likely to spill over into early 2019.
The total anticipated delivery for 2018 is now estimated at 16,750 residential units and the report says that this while still a significant volume, this figure represents a notable decline on previous projections.
Although the number of project delays is substantial, it is noteworthy that construction milestones have in general been met with delays ultimately resulting from overly ambitious handover programmes. As such, a sizeable number of units previously forecasted for completion in the second half of the year will fall into 2019.