Pent-up demand for lower-cost housing spurs activity in Dubai’s realty market
Dubai remained unaffordable to many despite property prices and rentals close to levels in the first quarter of 2014.
Dubai — Amid a noticeable decline in buyers from Russia and CIS countries that eventually led to a fall in Dubai property prices in the first quarter, a pent-up demand for affordable housing is spurring local government, investor and developer activity in 2015, market analysts observed.
Dubai remained unaffordable to many despite property prices and rentals close to levels in the first quarter of 2014. Therefore, Dubai Municipality and developers shifted their attention to target the underrepresented affordable segment, Asteco said in its latest UAE Property View Report.
“For instance, Dubai Municipality announced the allocation of over 100 hectares of land in Muhaisnah 4 and Al Quoz 3 and 4 to developers to build housing affordable to rent for those earning between Dh3,000 and Dh10,000 per month. Similarly, other projects were launched during the first quarter including 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. 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 the Akoya Oxygen project,” the real estate company said.
Another trend is that value-for-money is becoming more important than prestige for with a shift in market preference away from high-end luxury to value-for-money projects located in completed or almost-complete developments, Asteco pointed out.
The first three months of this year showed little or no movement for Dubai’s residential sales market. Following on from second half 2014 trends, overall apartment and villas sales prices continued to fall, registering a respective three per cent and two per cent decline in first quarter, as the Middle East’s largest independent full service real estate company highlighted the.
“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,” Asteco said.
According to Reidin data, transaction volumes for completed apartment properties were down by 12 per cent in first quarter 2015, with completed villas falling by 35 per cent compared with the same quarter in 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 John Stevens of Asteco.
Asteco said a 35 per cent year-on-year decline in villa transactions in first quarter 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 nine per cent quarter-on-quarter drop in sales prices registered at The Meadows and Springs communities.
Due to the large volume of properties currently for sale, Al Furjan and Jumeirah Park also declined by seven per cent and five per cent respectively while the very top-end of the market, Palm Jumeirah saw prices decline in first quarter.
“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.
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