Residential sales volumes in Dubai increase by 30% in Q4 2016 says Chestertons’ latest report

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  • Dubai Marina records most transactions in Q4 with AED 724 million as tenants look to buy;
  • Average apartment and villa sales prices dropped by 1% and 2% respectively in Q4 and 3% and 6% throughout the year;
  • Average apartment and villa rents fell by 2% in Q4 and 3% and 5% respectively for the year;

According to the Q4 2016 Dubai Residential and Office report from leading international property agency Chestertons MENA, buying in the emirate is becoming a preferred option for many tenants.

The report reveals total residential transaction volumes and total value of transactions increased by 30% in Q4 2016 compared to the previous quarter. “This is a possible indication that the gap between what a seller expects to achieve and the amount that a buyer is actually willing to pay is closing still further,” said Robin Teh, Country Manager – UAE & Valuations & Advisory Director, MENA.

“The average drop in sales prices in areas such as Dubai Marina, Emirates Living and JLT have made these locations more attractive to potential homeowners who may have previously been tenants. While International City remains an attractive area for investors, Dubai Sports City provides affordable units which have grown in demand over the last couple of years.”

Dubai Marina, International City, Dubai Sports City, Emirates Living and Jumeirah Lake Towers were the top five locations in total transaction values and volumes in Q4 2016 – Dubai Marina occupies the number one spot with 416 transactions worth AED 724 million in Q4 and AED 2.9 billion in total throughout 2016.

Teh said: “Residential cash sale transactions were approximately AED 18 billion in 2016, although this was an overall drop of 25% from 2015. Records show an increase in mortgaged purchases, which points towards more owner/occupiers buying property in Dubai.”

Apartment sales prices in the emirate in Q4 2016 fell marginally across the board by 1% on average, while year-on-year there was an average decline of up to 3%. The worst performing area was Dubailand, where the average sale price for apartments fell by as much as 4% in Q4 compared to the previous quarter, and 9% overall for the year. Average apartment prices in JVC and Remran saw no change over the quarter and a minimal 1% drop throughout the year.

Villa sales prices decreased by an average of 2% in Q4 2016 and 6% overall for the year. Villas in Al Furjan saw a marginal drop from the previous quarter, but recorded a marked 9% fall in prices through 2016; while prices in Jumeirah Park declined by 5% from Q3 and 7% year-on-year.

The price of villas in The Lakes and Arabian Ranches fell 2% over the quarter and 6% overall for the year. Only villas on Palm Jumeirah showed any signs of price increase (1%) from Q3 to Q4, while remaining stable for the year.

“Real estate prices dropped at a slower rate during 2016 as the ripple effect of global and economic uncertainty continued to impact the market in Dubai. We expect this to continue into the first half of 2017 and prices to remain flat,” said Teh.

Approximately 3,000 residential units entered the market in Q4 2016, bringing the estimated total residential supply in Dubai to 472,000.

On average, there was a 2% drop in apartment rents Q4 2016 across all areas and a 3% decline year-on-year. However, apartments in JLT and Business Bay fell by 8% over the course of the year and DIFC by 7% over the same period. Only Downtown Dubai held its rental rates from 2015.

Average villa rents in the emirate also fell – 2% from Q3 and 5% annually. JVT, Al Furjan and Arabian Ranches all saw a 5% drop in rents in Q4 compared to the third quarter, with JVT experiencing a 10% fall overall year-on-year. Rents in Jumeirah Golf Estates dropped 9% over the year.

Despite experiencing a marginal 1% drop in rents from Q3 to Q4, Palm Jumeirah was the only area to witness an overall increase in rental rates (1%).

Teh said: “Demand remains relatively stable in the rental market, with tenants having more options of locations as rents dropped in 2016. We expect the downward pressure

on rents to remain throughout the first quarter of 2017 with prevalent private and government cost-cutting measures prevailing along with employment instability in the labour market.”

Office rentals showed a slight drop in Q4 2016 compared to Q3 and, overall, fell by as much as 5% in 2016 in Business Bay, with only office properties in DIFC remaining unchanged over the year.

Teh said: “We expect the office market to remain flat in the first half of 2017.”

Chestertons MENA offers a full range of property services, including residential and commercial sales and leasing, investment agency services together with professional valuation and plant and machinery services. In addition, Chestertons MENA has a very active international sales division, specialising in the sale of prime, Central London residential apartments and houses to investors from across the entire MENA region with 33 offices across the UK capital.

With over 200 years of experience, Chestertons is one of the leading international property consultancy firms, in addition to one of the biggest networks of branches in London, Chestertons also has offices throughout Europe, reaching Australia and Singapore and a burgeoning Middle East network with offices in Dubai, Abu Dhabi, Saudi Arabia and Qatar.