- Seasonal decline reduces residential transactions by 23% quarter-on-quarter, offsetting positive trends of Q1
- Q2 apartment and villa rentals decline marginally by 2%
- Apartment sales prices remained flat in Q2, villa prices up 3%
Chestertons MENA has reported that the total number of residential transactions in the second quarter of 2017 declined 23% from the previous quarter, seemingly impacted negatively by the onset of summer.
After a promising start to 2017, the sales of off-plan properties plummeted by 28% in terms of volume and by as much as 43% in value; transactions of completed-units were also down by 17% in volume and 7% in value.
Apartment sales provided some consolation for the market as it remained flat q-on-q while villas saw a 3% increase. However, rental rates for both villas and apartments fell by 2% during the same period.
“The positive momentum from the first quarter did not translate into increased activity in the second quarter, as the decline was evident in both completed-units and off-plan transactions, with the total volume of residential transactions down 23%,” said Ivana Gazivoda Vucinic, Head of Advisory and Research, Chestertons MENA. “Seasonality and an amount of uncertainty have curbed transactional volumes. However, we expect increased activity as we approach second half of the year.”
Gazivoda Vucinic added, “It is also expected that sales and rental values will maintain the same trend, moving into the last quarter of the year when transactional activity picks up again.”
Apartment sales prices in Dubai Silicon Oasis grew 13%, the highest q-on-q increase among observed areas, while Jumeirah Village Triangle rose 11% – buoyed mainly by sales of smaller units and the expectations of increased capital growth in the near future.
Unsurprisingly, the introduction of new stock negatively impacted the sales prices in areas like Business Bay and Dubai Land at 12% and 10% respectively. While Downtown recorded a 7% decline, due, in part, to the release of a number of branded residences in the area.
Q-on-q sales prices in the villa market increased 3% overall, continuing the positive trend from the previous quarter as Palm Jumeirah rose by 10%; Jumeirah Park, The Meadows, and Springs increased by 4%; and Victory Heights up by 2%.
Rents across apartments declined by 2% with Jumeirah Village Circle and The Greens witnessing the largest decline at 5%, followed by Dubai Silicon Oasis and International City where rates fell by 4%. More established areas, including DIFC and Dubai Marina bucked the trend, remaining relatively flat q-on-q, with the exception of three-bedroom units which fell by 7%.
Villa rents also fell by 2% but interestingly witnessed the highest transactional values. Villa rents on Jumeirah Islands witnessed a slight increase of 3% while other areas such as Victory Heights, The Lakes, and Al Furjan declined by 8%, 6%, and 4% respectively. The Meadows and Jumeirah Golf Estates witnessed no significant rental value changes during Q2.
“Second quarter apartment sales prices remained stagnant and the recent addition of new stock resulted in downwards pressure on pricing in some secondary areas. The majority of the more established areas saw no change with the exception of some that saw upward trends,” said Gazivoda Vucinic.
Smaller units in their respective sub-markets were more resilient to the decline as studios and one-bedroom apartments together with two and three-bedroom villas witnessed the lowest drops.
The top areas based on sales transaction volume were Dubai Marina (AED840M), Emirates Living (AED840M), and Palm Jumeirah (AED760M).
The most expensive property? A villa in Emirates Living that sold for AED 90M in the second quarter.
“The villa market witnessed moderate transactional volumes during the quarter highlighted by several transactions in the Palm Jumeirah that pushed overall sales prices up 10% marking a 3% increase in sales prices,” added Gazivoda Vucinic.
In terms of both sales price and transactional volume and value, the average sales price in the office districts decreased by 5% on average while the highest decline was recorded in JLT at 15%. DIFC was the only commercial district which recorded a minor increase of 1%.
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.