Dubai residential sales gain pace in Q3

Dubai - The recovery in sales activity was primarily driven by ready property sales.

Dubai's residential sector witnessed a more buoyant third quarter, with pent up sales demand along with lower prices and rents spurring market activity resulting in a 50 per cent surge in quarter-on-quarter transactions, albeit down 21.7 per cent year-on-year, research data shows.

According to the latest research from Chestertons, total transaction value reached Dh12.99 billion during the third quarter, representing a quarterly rise of 43.4 per cent, although a fall of 15.2 per cent on an annual basis.

However, despite a clear quarterly rise in property sales during the third quarter, Dubai's real estate market is expected to face further challenges in both the rental and sales market, said the research "Dubai Residential Report Q3 2020."

"We expect the final quarter of 2020 to see further declines in average sales prices and rents, with performance set to increasingly vary by property type and location. While the longer-term outlook is less clear, assuming a broad economic recovery, we expect the market to see greater price stability over 2021," said the report.

Apartment prices fell 3.4 per cent Q-on-Q, an increased rate of decline from the previous quarter, while villa sales prices witnessed a marginal fall of just 0.2 per cent.

The recovery in sales activity was primarily driven by ready property sales, which accounted for 58 per cent of total transaction volume and two-thirds of overall transaction value. While off-plan sales remained at a more similar level to Q2, with total transaction volume and value falling by 2.1 per cent and 5.0 per cent, respectively, off-plan activity showed signs of regaining pace over September

In the rental market, apartment rental rates fell by 3.6 per cent, whereas villas saw declines of 1.2 per cent

Chris Hobden, head of Strategic Consultancy, Chestertons Mena, said Dubai witnessed a clear increase in transactional activity during the third quarter, building on a recovery seen during the final month of Q2, following the easing of Covid-19 restrictions.

"However, transaction volumes remain lower annually, and we expect both prices and rents to face further downward pressure over the final quarter of 2020. The ongoing economic impacts of Covid-19, and a likely reduction in the emirate's population, both key drivers of Dubai residential prices, are set to hamper market performance," said Hobden.

In the sales market, average apartment prices fell by 3.4 per cent from Q2 2020, denoting a 11.4 per cent year-on-year decline. The largest price declines were witnessed in Dubai Sports City, with average prices falling by 5.5 per cent Q-on-Q to Dh621 per sqft. Dubai Silicon Oasis was the only other location to see a quarterly fall in average prices above 5.0 per cent, reaching Dh540 per sqft, representing a 5.3 per cent drop.

Locations witnessing more moderate declines in Q3 included popular communities such as Dubai Marina and The Greens, with prices falling by just 2.4 per cent and 2.5 per cent to Dh985 per sqft and Dh815 per sqft, respectively. Average apartment prices in The Views and Business Bay also performed comparatively well, both declining by 2.7 per cent to Dh1,022 per sqft and Dh970 per sqft, respectively, over the third quarter.

Villa sales prices saw a more moderate fall of just 0.2 per cent and, on an annual basis, prices fell by 5.8 per cent. Palm Jumeirah was the only location to witness a price increase, up by 2.2 per cent from Dh1,820 per sqft to Dh1,860 per sqft while Jumeirah Park saw prices hold steady over Q3, at Dh720per sqft, having seen a modest decline of 0.7 per cent the previous quarter. Arabian Ranches and The Lakes both witnessed quarterly declines of less than 1.0 per cent, at 0.4 per cent, and 0.5 per cent, to Dh787 per sqft and Dh975 per sqft, respectively. The Meadows/The Springs saw the highest quarterly decline at 2.5 per cent, with average prices reaching Dh795 per sqft, down from Dh815 per sqft in Q2.

"Average villa prices performed comparatively well over the third quarter, with the pace of decline tapered by broader price stability across several locations and, in the case of Palm Jumeirah, an uptick in the average achieved sales price," said Hobden.

Apartment rental rates declined by 3.6 per cent in Q3, with all areas once again showing falls in average rental rates, with Covid-19's economic impact a determining factor.

International City and Discovery Gardens witnessed the sharpest quarterly rental decreases of 5.8 per cent and 5.5 per cent, respectively.

Villa rents proved more resilient, falling by just 1.2 per cent and 5.6 per cent on a quarterly and annual basis, respectively, with agents reporting an apparent uptick in villa enquiries since the easing of lockdown restrictions in May. - issacjohn@khaleejtimes.com