Dubai house prices stay on steady course in Q2

dubai - Off-plan residential market saw launch of over 4,000 new villas and apartments

Residential sales prices in Dubai remained stable during the second quarter of 2016, according to the latest Dubai Real Estate Market Overview by Abu Dhabi Islamic Bank (ADIB) and its real estate advisory subsidiary MPM Properties.

The off-plan residential market remained buoyant with the launch of over 4,000 new villas and apartments across 20 projects.

Around 70 per cent of new launches were in the price range of Dh850 to Dh1,100 per square foot, with developers continuing to offer incentives, including post-handover payment plans.

Buyers remained cautious, with the highest demand for off-plan sales from reputed developers who have proven track records of timely delivery.

During the April-June period, average residential rents for apartments and villas dropped marginally by one per cent, with a year-on-year fall of four per cent.

Overall, the decline for apartment rents was comparatively higher in non-freehold areas at five per cent, while freehold areas, despite increases in new supply, showed a three per cent decline year on year.

Paul Maisfield, CEO of MPM Properties, said: "With the launch of so many new units in Q2, there is no shortage of choice for buyers in Dubai. But with more people seeking to get onto the property ladder to achieve long-term capital appreciation and relief from the vagaries of renting, the effect on prices is relatively neutral. While location is still a major factor, quality of product, incentives and payment plans are also factors which are driving demand."

The prime office market remained stable throughout the last quarter, with no major changes from the previous quarter.However, ageing properties saw a marginal drop, with the lower benchmark level dropping to Dh90 per sq ft. Strata office space owners are now accepting rents as low as Dh55 per sq ft per annum in secondary areas such as Business Bay and Jumeirah Lakes Towers due to the rise in supply and prevailing high vacancy rates.

With the addition of one million sq ft, the total office stock across Dubai currently stands at 93 million sq ft.

Weak demand and low yields are resulting in conversion of some office space to residential or hospitality assets. Around 355,000 sq ft of existing office space has been converted into residential use in Dubai Silicon Oasis.

Hotel performance indicators showed a drop in average daily rates by 16 per cent quarter on quarter, while occupancy rates remained stable at above 80 per cent, which is high in comparison to other international markets.

Retail rents and occupancy rates remained stable. However, retailers have started renegotiating lease terms with mall operators, reflecting the fall in sales.

- haseeb@khaleejtimes.com