Dubai: Real estate sales and rentals suffered correction in the third quarter of the year compared to previous quarter but witnessed growth in both the segments compared to same period last year, according to a latest report.
Dubai’s real estate sector witnessed further stabilisation and a slowing down of both rental rates and sales prices in the third quarter of 2014 as the downward trend continued for the third quarter in a row according to Asteco’s Q3 2014 market report.
Apartment and villa rental rates dropped slightly by two per cent and three per cent respectively against the second quarter figures, with sales prices also showing a nominal decline at one per cent and four per cent respectively, although year-on-year growth remained positive overall with a 31 per cent and 17 per cent increase in sales prices for apartments and villas.
“For the first time since 2012 we have seen both residential rental rates and sales prices decline as a result of a natural adjustment to ongoing new supply entering the market. The impact of mortgage cap and higher transaction fees is also making it more expensive for prospective buyers to get onto the Dubai property ladder,” said John Stevens, Managing Director, Asteco.
On a positive note, the report highlighted the launch of 27 new projects during Cityscape, last month, generating ‘strong levels’ of investor interest. According to Asteco, sales demand is being redirected from premium locations such as DIFC, which averages Dh2,200 per square foot, to lower-priced properties in JLT such as Mazaya and Dome Towers, which are achieving around Dh850 per square foot for shell and core office space.
In terms of apartment sales, the top performers in Q3 2014 versus the same period in 2013, were Jumeirah Lakes Towers (JLT) and Downtown Dubai, up by 37 per cent and 35 per cent respectively, and priced at up to Dh1,500 and Dh3,000 per square foot respectively. In contrast, areas like Jumeirah Village are currently available at Dh800 to Dh1,050 per square foot, down three per cent quarter-on-quarter but up 32 per cent year-on-year.
Villas within the Al Furjan development, located on the Mohammed bin Zayed corridor, and on Palm Jumeirah, recorded per square foot sales rate of up to Dh1,150 and Dh4,000 respectively, with a four per cent quarter-on-quarter drop for Al Furjan and no movement for Palm Jumeirah, but still a strong 38 per cent and 55 per cent year-on-year growth respectively.
In terms of residential rental rates, Discovery Gardens and International City registered a seven per cent drop following previous year-on-year record growth levels of 23 per cent and 40 per cent respectively.
In comparison, some of Dubai’s prime areas, such as Downtown Dubai, have remained relatively stable and Palm Jumeirah recording three per cent quarter-on-quarter growth due to restricted supply and ever present demand.
“The popular Dubai Marina, which has suffered from long-term construction and traffic congestion woes, saw a 2 per cent decline since Q2 2014, as tenants look to relocate to more accessible areas,” said Stevens.With quarter-on-quarter rental rate stability and a 42 per cent year-on-year increase, a two-bedroom apartment in JLT is currently leasing for up to Dh150,000 with the Dubai Marina equivalent fetching up to Dh185,000.
Villas also registered an average overall 3 per cent decline with the Springs down by 8 per cent and Arabian Ranches and Mirdif both down by 5 per cent since Q2 2014, which Asteco partly attributes to the impact of more affordable supply coming on stream in other communities such Jumeirah Village and Dubailand.