Although Dubai’s diversified economy is outperforming its neighbours, devaluation of major currencies against US dollar and global economic uncertainty, has left considerable implications, which are more visible in the real estate market as property sales prices and rentals rates continue to decline across Dubai.
According to the report ‘Q2 2016, Dubai MarketView’ published by CBRE – a global real estate agency, prices of residential properties have fallen for the 6th consecutive quarter during Q2 2016.
Average sales rates witnessed a drop of 2% quarter-on-quarter and a drop of 12% year-on-year. Although all segments of the real estate have been affected in Dubai, however, luxury and higher-end residences have observed the most significant drops.
The report further illustrated, “Prices within the mid-market segment have proven to be far more resilient to this downward rate trend, reflecting the current demand for affordable accommodation in freehold communities”.
Predictions are that sale rates will further decline by 3-5% in the coming quarters. The drop in rates might differ according to the location.
Average residential rates during the quarter fell by 1-2% year-on-year, as mentioned by the report. In affordable leasehold locations, the mid-market segment has faced downward rental pressures such as Oud metha, Bur Dubai and Al Bashra.
As residential rental rates have not seen a steep decline in Dubai, any drop in the prices would come as a relief for residents who live on rent.
Head of Research and Consulting at CBRE Middle East, Mat Green, said, “It is estimated that around 48,000 new residential units (apartments and villas) could enter the Dubai market during the period 2016 to 2018, provided that construction delays are at a minimal.
Office rental demand
During the past two decades; prime office rentals have shown a robust and constant pick-up in their pre-leasing activities, reflecting the demand for high-end, individually-owned offices in Dubai, according to the report.
Moreover, the report also mentioned that prime office rental rates would remain firm during the remainder of 2016. Average prime yearly rents have remained stagnant – recorded at Dh1920 sq m per annum in Q2 2016.
“The prime office rental market has potential for growth in well-located buildings around the CBD and accessible locations such as Tecom Freezone, with its most recent extensions, the Edge and the Butterfly, almost entirely leased out even before their expected completions later in Q3,” concluded Green.
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