Dubai Real Estate Market to Decline Further, Say Industry Professionals

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  • Residential property prices registered 12 month decline of 2% on average while rents declined by up to 5% in some key areas
  • Off-plan residential properties accounted for 61% of the total transfers during the quarter
  • Approximately 3,800 units were handed over in Dubai during Q1 2018
  • Property Monitor Residential Survey reveals that for Q1 2018 the majority of agents are predicting apartment and villa/townhouse prices as well as rents will decline by up to 5%

Cavendish Maxwell has released its Q1 2018 Dubai Market Report providing a summary of the residential market activity and highlighting price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties. The data is provided by Property Monitor, a real estate intelligence platform powered by RICS accredited property professionals. The report also includes special sector focus on the industrial and warehousing sector.

Price and Rent Performance

Price movement in the last 12 months has varied between communities and among different buildings within the same community, thus reflecting greater differentiation in how available properties are now trading. During Q1 2018, residential property rents declined at a more pronounced rate than sales prices, resulting in yield compression in most communities. The pressure on housing allowances has also impacted rental market performance and the pool of tenants at the higher end of the spectrum continues to shrink. Rent declines will be more pronounced in areas with increasing supply and those located away from central business districts and public infrastructure.

Property Monitor Residential Survey

The Property Monitor Residential Survey conducted among agents in Dubai revealed that for Q2 2018 the majority of agents surveyed are predicting that apartment and villa/townhouse prices as well as rents will decrease by up to 5%. Regarding transactions in Q2 2018, 42.4% of agents expect an increase in new buyer inquiries, while 55.6% of agents expect an increase in new seller instructions. 38.9% of those surveyed believe new seller instructions will also increase during the quarter Q2 2018.

Sector Focus – Industrial and Warehousing

A sector focus on industrial and warehousing comments on how the market witnessed a continuation of trends from previous years with the vast majority of inquiries being for the small to mid-sized sector of the market. Buyers/tenants are being more cautious and are carrying out further due diligence on their available options prior to making real estate related decisions. This is prolonging the time frame to conclude a transaction but is also characteristic of a more mature and stable market. Prime yields now stand a little under 8.5% which is a higher yield when compared to European markets.

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