Dubai tenants welcome home handovers
Rents in Dubai continued to witness singledigit declines in Q3 on the back of more supply that resulted in more vacancies as tenants scouted for better deals.
dubai — Rents in Dubai continued to witness single-digit declines in the third quarter of 2017, according to real estate consultancy JLL. This was on the back of more supply — approximately 3,300 homes were delivered in Q3 — which resulted in more vacancies as tenants scouted for better deals.
“Numerous residential buildings, even within prime areas such as Downtown and Duba Marina, are seeing increased vacancies, and as such, tenants have been able to renegotiate their rents downwards by an average of five to seven per cent,” said Craig Plumb, head of research — Mena at JLL.
The majority of completions during Q3 were apartments. Villas and townhouses contributed 660 and 75 units respectively. The largest completions were Duja Tower in Trade Centre First, adding 679 units and The Polo Residence in Meydan with 598 units. District 1 and Lila in Arabian Ranches 2 contributed 267 and 219 units respectively.
Sale prices for both villas and apartments remained largely stable over Q3, according to JLL. The total value of transactions of existing residential properties (excluding land) has gone up, with sales in the year to August exceeding Dh13.7 billion, up by 28 per cent from the Dh10.7 billion recorded in the corresponding period in 2016.
Forecasting 80,000 homes to be handed over by the end of 2019, JLL warns that this could result in a potential over-supply situation. However, in reality not all of these will happen as developers typically over promise.
Plumb estimated that sales prices will remain unchanged while rents will go down further in Q4.
Luxury market
The off-plan market is currently sustaining momentum in the Dubai residential market. This also applies to luxury residential property.
“New locations such as CityWalk, Bluewaters Island, Bvlgari, Dubai Creek Harbour and Dubai Hills Estate make both investors and end-users very excited about new stock. Eighty per cent of the off-plan luxury market is going to investors. Off-plan properties also have the added advantage of flexible payment plans,” said Alexander von-Sayn Wittgenstein, luxury sales director at Luxhabitat.
The new supply of luxury real estate is expected to result in a readjustment of price points on the secondary market.
“Indians, Pakistanis and GCC nationals are the main demographic of buyers in the luxury off-plan market. You can’t compare Palm and Emirates Hills to Bluewaters and Citywalk as they are different products that attract a different profile of buyer. A better comparable would be comparing Palm and Emirates Hills villas to the ones in Dubai Hills Estate, District One and Jumeira Bay,” added Wittgenstein.
Dubai witnessed luxury residential sales worth Dh1.9 billion in Q3, according to Luxhabitat.
Luxury villa sales accounted for Dh688 million, with 71 per cent of transactions coming from Emirates Living areas. The most expensive villa transacted in Q3 was in Emirates Hills for Dh95 million. Luxury apartment sales were worth Dh1.2 billion in Q3, with 50 per cent of transactions from Dubai Marina.