Residential property prices and rates in Dubai remain under pressure for the rest of the year as a result of oversupply, with some 50,000 new units expected to be delivered in 2019, a leading international real estate services firm said.
For the remainder of the year, sales prices in Dubai are expected to continue to soften by up to 5 per cent in some instances, while rental rate declines appear to be slowing with decreases of just 1 per cent witnessed in third quarter, according to the latest research from Chestertons' Observer: Dubai Market Report Q3 2019.
Nick Witty, managing director of Chestertons Mena, said there were further sales price declines in the third quarter for both apartments and villas due to excess supply and muted economic growth. "The rental market proved to be more resilient however, with a marked slowdown in the rate of decline."
However, for 2020, the firm said it anticipated the 10-year residency visa, the economic stimulus package and perhaps, more importantly, the introduction of the new Real Estate Committee, which has the mandate to boost demand and control supply, contributing to a more favourable outlook.
Average villa prices were down 3 per cent in third quarter while apartment prices witnessed a 4 per cent decline from the previous quarter. In the villa market, the Meadows and Springs were resilient with no change and remained at Dh850 per sqft, while Palm Jumeirah softened by 2 per cent to Dh1,927 per sqft. Arabian Ranches witnessed the highest decline at five per cent, with rates now at Dh793 per sqft. Prices at The Lakes and Jumeirah Park both declined by three per cent to Dh1,010 per sqft and DhD804 per sqft, respectively.
"The supply of brand-new properties, with their wealth of amenities, has resulted in older communities bearing the brunt with prices being lowered to compete for and attract end-users," said Witty.
Chestertons says in the rental market, rates continued to soften in the quarter, but the rate of decline has slowed with average villa and apartment rates softening by just 1 per cent. "This could indicate the rental market is beginning to recover, which could be accentuated further by the three-year rental freeze currently being explored by the Dubai Land Department."