Decrease in Q3 Dubai residential sales as transaction values drop by 29% says Chestertons’ latest report

  • Apartment and villa sale transaction volume 24% down on Q2, with villa and apartment prices both down 1%
  • Rental rates witness marginal declines of 1% in both villas and apartments
  • Office transactions down by 20%
  • Investors in mid-market communities reap benefits of high yields of up to 10%

dubaiTotal residential transaction volumes decreased by 24% in Q3 2016, while there was a 29% drop in value compared to Q2, according to the latest research report from leading international property agency, Chestertons MENA.

The Dubai Q3 2016 Dubai Residential & Office report published today reveals there were AED 3.45 billion worth of residential sales transactions during that period. Dubai Marina was the most popular area of the emirate with sales worth AED 654 million.

Robin Teh, Country Manager – UAE & Valuations & Advisory Director, MENA, said: “Dubai Marina will always be an attractive location for investors with consistently high levels of yields. The highest transaction values remained in the prime areas such as Emirates Living, Palm Jumeirah and Downtown Dubai. However, as investors bide their time on the bottoming of the Dubai market, total transaction volume and values dropped in the last quarter, compounded by the traditional lull in activity due to the summer and holiday season.”

In the office market, total transactions decreased by 20% to AED389 million. Volumes of sale transactions values in Q3 also fell by approximately 24% compared to Q2, with the majority of sale transactions in Business Bay followed by JLT.

Sales prices in both villa and apartment sectors fell by around 1% during the last quarter, with apartments in Business Bay (AED1,350 per sqft), Discovery Gardens (AED850 per sqft), International City (AED695 per sqft) and The Views (AED1,470 per sqft) witnessing the greatest drop; while prices in Dubai Motor City, JLT and Remraam remained unchanged.

High end properties on the Palm, those over AED 2,200/sq. ft. were the only villas from the sample measured to hold their value.

Teh said: “We expect prices to remain at stable levels leading up to the end of 2016.”

It was a similar story in the rental market, with a 1% decline in both apartments and villas across all unit types. Average one bedroom apartments in Remraam fell to AED 57,000 per annum. However, two bedroom apartments in select locations saw drops of up to 2% such as Downtown Dubai, JLT and the Greens. The average rents for three bedroom apartments in DIFC, Downtown Dubai and Dubai Marina remained the same in all cases.

In terms of villas, Arabian Ranches saw the greatest drop, with an average 4 bedroom now renting at AED 245,000 per annum. While villas on the Palm, JVT 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.”

Despite the relatively flat performance for the emirate during Q3, gross yields across all areas of Dubai remained stable, both the apartments and villas segments. “Apartment gross yields are between 6% and 8%, while mid-market communities International City and Discovery Gardens’ gross yields reach 9% and 10% respectively,” said Teh.

“Villa gross yields are still in the range of 4% to 6% with gross yields in prime areas such as Palm Jumeirah and Jumeirah Islands standing at approximately at a more modest 3%,” he added.

Download: dubai-observer-q3-2016

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.