Dubai realty deals fall 69% in H1

The market is expected to continue facing downward pressure as more supply enters the Dubai market.

Dubai has witnessed a 69 per cent decline in the number of residential transactions in the first half of 2015 compared to the same period in 2014.
Blame it on the new supply of residential units, falling global oil prices weakening investor sentiment and the devaluation of the Russian rouble.
According to Dubai Land Department data, only 7,300 apartments and villas were sold in the first six months of 2015, compared with around 14,000 over the same period in 2014.
Sale prices of property in Dubai dropped an average of eight per cent since June 2014, according to JLL's second-quarter Dubai real estate market overview report. Declines in apartment sale prices, however, exceeded that of villa prices.
"The price correction can be traced to Q4 2014 when we saw a dampening in investor sentiment following oil price fluctuations. Dubai's residential market was becoming overpriced, squeezing out serious, non-speculative investors and end-users," says Dana Salbak, research manager at JLL Mena.
Residential rents in Dubai have remained flat year-on-year across both apartments and villas, estimates JLL.
The market is expected to continue facing downward pressure as more supply enters the Dubai market.
Approximately 1,200 residential units were handed over in the second quarter. A further 16,000 units are expected to enter Dubai by the end of 2015. However, the delivery of some projects may be delayed into 2016 and beyond.
"The Dubai real estate market continued to face downward pressure during the second quarter of the year. We expect transaction volumes, and subsequently sale prices, to drop further in the second half of the year," said Craig Plumb, head of research at JLL Mena.
One more thing: Will the lifting of sanctions on Iran benefit the UAE property market?
"It is unlikely that we'll see any impact from the lifting of sanctions in the short term. It is more of a long-term play and is likely to primarily boost the office market as we expect corporates to expand and take Dubai as their headquarters when serving the Iranian market," adds Salbak.
Meanwhile, Dubai's office market remained steady in the second quarter. Commercial rents for Grade A space across the central business district, or CBD, remained flat on average at Dh1,880 per square metre per annum.
"We've seen some buildings across the CBD perform better than others, especially those with larger floor plates, more parking space and easier access to amenities," Salbak added.
Approximately 162,000 square metres of gross leasable area, or GLA, was delivered in the second quarter ­- eight buildings in Dubai Design District, four buildings at Arenco Business Park in Dubai Investments Park and The One Tower in Tecom. Total supply of office space in Dubai has increased to 7.8 million square metres.
- deepthi@khaleejtimes.com