Investors scout for distressed property sales in Dubai

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Investors scout for distressed property sales in Dubai
Prices in secondary locations, such as Discovery Gardens, have declined the most in third quarter of 2015. - Photo by Leslie Pableo

Contrary to tenant rants of landlords increasing rents across Dubai, Cavendish Maxwell claimed that apartment rents remained stable in the third quarter.

By Deepthi Nair

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Published: Tue 17 Nov 2015, 11:00 PM

Last updated: Wed 18 Nov 2015, 9:15 AM

If you are looking to rent a villa, bide time no more.
Rents have decreased in most of the major villa communities in the third quarter of 2015, according to a report issued by Cavendish Maxwell, a property consultant.
However, rents declined on average by only one per cent in the popular Emirates Living communities of Meadows, Springs and Lakes. In Victory Heights and Jumeirah Park, rents dropped by up to three per cent in the third quarter from the previous period.
Contrary to tenant rants of landlords increasing rents across Dubai, Cavendish Maxwell claimed that apartment rents remained stable in the third quarter.
Prime locations still command premium rents. For instance, a one-bedroom apartment in Downtown Burj Khalifa ranges from Dh110,000 to Dh125,000 per annum. The same would go in the range of Dh95,000 to Dh110,000 in the Views or Greens.
Meanwhile, on the sales front, the Dubai market continued to go through a correction phase in the third quarter. Apartment and villa prices both dropped by an average of two per cent in the period, consistent with declines in the previous quarter.
"Investor interest has increased for bargains and distressed sales. When compared to the second quarter, transacted residential prices dropped by 5.6 per cent. The median transacted apartment price stands at Dh1,008 per sqft. The median transacted villa price stands at Dh1,068 per sqft," said Haider Tuaima, research manager at ValuStrat, a Dubai-based property consultancy.
Buyer's market
Experts predict that 2016 will be a buyer's market, with sellers willing to negotiate prices. With a steady decline in prices, stagnant investor interest, delayed supply, stable rents and decreasing sale volumes, statistical analysis by ValuStrat suggests that next year may witness a plateau in prices.
The rate of decline of sales prices in prime locations such as Business Bay, Downtown Burj Khalifa and Palm Jumeirah decreased.
In the third quarter, prices continued to drop at the same rate as the second quarter in Dubai Marina, the Greens and Views, Jumeirah Beach Residence and International City, while prices in Dubai Sports City and Motor City declined at a more accelerated rate.
Prices in secondary locations such as International City, Motor City and Discovery Gardens have declined the most at 10 per cent, 10 per cent and nine per cent, respectively, over a 12-month period from the third quarter of 2014.
Buyer inquiries continued to decrease while seller instructions increased in Q3 of this year.
The decline in villa prices slowed in the third quarter in Jumeirah Golf Estates, the Meadows, Springs and Lakes. Price declines accelerated significantly in Jumeirah Islands, Victory Heights, Arabian Ranches and Al Furjan during the quarter in comparison to the previous one.
According to Cavendish Maxwell, approximately 6,000 residential units were introduced into Dubai in the first three quarters of this year in areas such as Dubai Sports City, Dubailand, International City, Jumeirah Golf Estates and Jumeirah Village Circle. These figures exclude any serviced/hotel apartments.
Over 70 per cent of completed developments in 2015 have been apartments, the remaining being villas and townhouses.
Some of the most-densely developed areas such as Dubai Marina, Jumeirah Lakes Towers and Downtown Burj Khalifa have had a limited number of newly-launched residential developments during this year as the reach their development capacity.
There were approximately 18,000 residential units scheduled to enter the market in 2015. Many developments initially scheduled to be completed at the end of 2015 have been delayed to the first half of 2016 or to a later date in 2017.
"Twenty-seven per cent of this year's residential projects with approximately 7,800 units scheduled for completion, is delayed and have been rescheduled for handover during the next two years, reflecting some construction slowdown in this sector," added Tuaima.
Additional supply entering the market could place further pressure on prices till the end of 2015 and through 2016. Factors such as the estimated population and job growth leading to 2020 should help absorb this upcoming supply.

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