Potential investors and tenants in Dubai are set to reap the benefits of competitive pricing and rental rates as several off-plan projects launched between 2014 and 2016 are delivered, according to Chestertons.
Its Dubai Market Report Q1 2019 said that in the sales market, the downward pressure on prices witnessed throughout 2018 has continued into the first quarter of 2019 with villa and apartment prices down 1 percent and 3 percent respectively.
Ivana Vucinic, head of consulting, Chestertons MENA explained trends in the market to Arabian Business this week. Here are the excerpts from her insights.
With over 20,000 units entering the market that resulted in softening across the sales and rental sectors for both apartments and villas, the trend is expected to continue throughout 2019 as the number of units to be delivered is estimated to be even higher. In turn it is expected to see developers and landlords continue to offer a range of financial incentives and become increasingly innovative in their approach.
With regards to sale prices of villas, the most resilient community was The Lakes with prices unchanged from Q4 while The Meadows and Springs witnessed the highest declines, revealing a 4 percent decrease. Palm Jumeirah and Arabian Ranches both saw declines of 2 percent during the same period.
Transactional activity, for the most part, was on the rise in Q1 when compared to Q4 2018.
The completed unit market witnessed a small decline in transactional volumes in Q1 from 3,278 to 3,230 units while the volume of off-plan transactions was up 10 percent on Q4 2018.
Off-plan transaction values increased by 35 percent from AED5.82 billion in Q4 2018 to AED7.85 billion in Q1 2019.
Off-plan sales dominated the market in Q1, indicating the raft of incentives offered by developers, including five-year post-handover payment plans, registration fee rebates, guaranteed rental returns and the freezing of property service charges, all having the desired effect.
In the rental market, the additional supply and subsequent greater choice is creating a favourable scenario for tenants with average leases for both apartments and villas witnessing a 2 percent decline when compared to Q4 2018, the report noted.
In the villa market, JVT bore the brunt of rental declines, with a 5 percent decrease compared to Q4 2018 while Jumeirah Golf Estates, Jumeirah Islands and The Lakes saw no movement during that period.
Due to the supply/demand dynamics, several landlords have offered lower rental rates and incentives to attract and retain tenants. Multiple rent cheques, rent-free periods, waiver of security deposits and in some instances the landlord covering the cost of agency fees are all becoming increasingly more common.
(Credit: Arabian Business)