You were right! Dubai rents down only 1% in Q3

dubai - Tenants have more negotiating power in the current market

The traditional summer lull and holiday season resulted in a drop in Dubai residential transaction volumes and sales values in the third quarter of 2016, according to property agency Chestertons Mena. This was compounded by hesitation in purchasing decisions by investors.

Residential transactions decreased by 24 per cent in Q3, while there was a 29 per cent drop in sales values compared to Q2. There were Dh3.45 billion worth of residential sales transactions in Q3. Dubai Marina was the most popular area in Dubai with sales worth Dh654 million.

"Dubai Marina will always be an attractive location for investors with high levels of yields. The highest transaction values remained in the prime areas such as Emirates Living, Palm Jumeirah and Downtown Dubai," said Robin Teh, country manager - UAE and valuations and advisory director, Mena, at Chestertons.

Sales prices of both villas and apartments fell by around one per cent in Q3, with apartments in Business Bay, Discovery Gardens, International City and The Views witnessing the greatest drop; while prices in Dubai Motor City, Jumeirah Lakes Towers (JLT) and Remraam remained unchanged.

High-end properties on the Palm, those over Dh2,200 per sq ft, were the only villas to hold their value.

Dubai rents also witnessed a meagre one per cent decline in both apartments and villas. Average one-bedroom apartments in Remraam fell to Dh57,000 per annum. However, two-bedroom apartments in select locations saw drops of up to two per cent such as Downtown Dubai, JLT and The Greens.

In villas, Arabian Ranches saw the greatest drop, with an average four-bedroom now renting at Dh245,000 per annum. Villas on the Palm, Jumeirah Village Triangle and The Springs remained consistent quarter on quarter.

Teh said: "Demand remains relatively stable, with tenants having more negotiating power in the current market. Job losses and lower spending capacity have placed pressure on rates in Q2 and Q3 2016."

In terms of gross yields, affordable communities such as International City and Discovery Gardens outperformed the market: they achieved gross yields of nine per cent and 10 per cent respectively, according to Chestertons. The wider apartment market offered gross yields between six per cent and eight per cent.

"Villa gross yields are still in the range of four per cent to six per cent, with gross yields in prime areas such as the Palm Jumeirah and Jumeirah Islands standing at a more modest three per cent," Teh concluded.

- deepthi@khaleejtimes.com