Freehold property prices recover

Half of the freehold apartment locations monitored by the ValuStrat Price Index has initiated a gradual price recovery, while most freehold villa locations witnessed a continued marginal softening in values, the consulting firm said on Sunday.
"Increased quarterly residential sales prices, coupled with lower overall quarterly transaction volumes, indicate a cyclical trough stage for the residential market," the Dubai-based research firm said.
The third quarter residential price index report that analysed 26 freehold locations in Dubai has shown that mostly mid-affordable locations initiated the price recovery process, with quarterly increases ranging from 2.3 per cent to four per cent. The exception was the high-end Downtown Dubai, which also witnessed a clear trend of positive correction over the last six months.The third quarter 2016 index displayed an overall marginal 0.6 per cent annual decline in values. However, the monthly growth rate of residential values has been broadly stable for the past 15 months, but marginally declined this quarter, which was expected. The July residential index registered 97.7 index points while August and September both dipped by 0.1 per cent to 97.6 and 97.5 index points respectively.
"Even though sales transaction volumes came down in third quarter, which is expected during the quieter summer months, Dubai Land Department transacted sale prices for residential apartments have increased noticeably at 6.6 per cent annually and 5.2 per cent on a quarterly basis," said Haider Tuaima, ValuStrat Research Manager.
However, according to a report by real estate consultancy CBRE, residential property prices in Dubai fell for the sixth consecutive quarter during second quarter 2016, as the market continued to witness a slowdown with the latest average sales rates dropping two per cent quarter-on-quarter and 12 per cent year-on-year, with higher-end and luxury residences witnessing the most significant drops.
JLL has said in its Real Estate Market Overview that the Dubai Property market softened due to the extended period of dollar strength and lower oil prices, which has weakened the purchasing power of buyers across the region. Asteco has predicted that property prices and rental rates in Dubai are expected to fall further in the forthcoming 18 months as a result of a substantial supply of housing stock which is due for handover.
ValuStrat report said residential investment yields had compressed slightly, as median asking rents were eight per cent lower than third quarter last year and 7.1 per cent lower than second quarter this year. The highest net yields were registered in mid-affordable locations - ranging between 6.5 per cent and seven per cent.
For 2016, the latest estimated total supply of residential apartments and villas to be completed amounts to 15,191 units. Ten off-plan housing projects were launched in Q3 to add more than 2,000 units to the residential pipeline by 2020, said ValuStrat.
Office transaction sales prices fell by 8.3 per cent since last year but remained stable since the last quarter. Median asking rents for office space fell 9.3 per cent annually, and 4.9 per cent since the previous quarter. The median asking rent for office space was Dh 1,076 per sq m (Dh100 per sq ft). This quarter saw an estimated additional 140,000sq m (1.5million sqft) of Gross Leasable Area delivered in prime retail malls as a result of the inauguration of phase one of the Italian themed Outlet Village mall by Meraas, located in Jebel Ali, and Majid Al Futtaim's My City Centre Al Barsha.
The total number of hotel rooms and hotel apartments as of August 2016 in Dubai has crossed the 100,000 mark, with 100,211 units. Average occupancy during period January to August was 76 per cent, compared to 77 per cent during the same period last year. With five per cent more hotel rooms since last year, year on year average daily rate for the same period dropped by 10.8 per cent and hotel revenue per available Room fell 11.3 per cent year on year. - issacjohn@khaleejtimes.com