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Dubai real estate sales soar, prices down: ValuStrat

DUBAI, January 21, 2020

Dubai real estate sector reported double digit growth in residential and office sales as actual end of year supply was lower than originally projected, said the fourth quarter 2019 Dubai real estate review issued by leading consulting firm ValuStrat. 
 
The ValuStrat Price Index (VPI), a valuation-based index that tracks change in capital values for a representative fixed basket of properties, showed an overall 10.4% annual fall in capital values for residential sector, with quarterly declines hitting 2.5%. All established freehold locations monitored by the VPI saw capital values decline from the previous quarter, ranging from 1.5% to 3.5%.
 
On an annual basis, four out of 26 locations witnessed single-digit declines, villas in the Meadows, Palm Jumeirah and Emirates Hills, as well as apartments in Dubai Sports City. Capital values dropped more than 15% annually for apartments in Discovery Gardens, and Dubai Production City, it said.
“An evident positive buyer sentiment has been observed for the past 15 months, boosting investor demand, this was likely due to attractive prices, fewer off-plan launches and delayed project completions. Annually, cash sale volumes of ready homes grew 29.7% and off-plan sales jumped 68.3%,” said Haider Tuaima, Head of Real Estate Research at ValuStrat.
 
The Dubai VPI for residential rental values stood at 70.8 points, declining 3.8% quarterly and 9.1% annually. The average residential annual rent in Dubai was Dh87,961 ($23,948), apartments at Dh67,944 and villas at Dh210,918. Dubai’s residential net yields averaged 6%, with apartments at 6.2% and villas at 4.9%. Residential occupancy in Dubai was estimated at 86%.
 
As far as residential supply is concerned, a total of 24,613 residential units were confirmed to have been completed during the year, 19,505 apartments and 5,108 villas/townhouses. Total completions represented only 58% of the projected residential supply for 2019. More than half of 2019’s new supply was concentrated in four areas: Dubailand, Jumeirah Village Circle, Dubai Marina and Mohammed Bin Rashid City. Developers promising to handover no less than 340 projects totalling 90,000 units next year remains to be realised, given delays in construction as evidenced during the last five years.
 
“While we are not yet predicting price recovery, it is really interesting to see that more and more buyers are entering the residential market – perhaps an indication that many feel much reduced sales prices represent good value, and that it is now about the right time to buy. Lowered borrowing costs, improved product offerings and attractive developer payment plans may all now be creating the right conditions for improved buyer confidence in Dubai’s property market,” says Declan King MRICS – MD & Group Head Real Estate ValuStrat.  
 
The valuation-based index (VPI) for Dubai’s office capital values dipped 1.9% since last quarter to 66.3 ValuStrat Price Index points, registering the lowest quarterly decline since Q4 2017. Compared to the same period last year, office capital values fell 14.6%. Office space in Jumeirah Lake Towers witnessed the highest annual drop of 19.3% and 3.2% quarterly, this was followed by Barsha Heights (TECOM) with declines of 13.7% annually and 2.2% quarterly. Dubai International Financial Centre (DIFC) demonstrated relative resilience to the overall citywide downward trend, as capital values softened annually by 7.3% with no change since Q3 2019.
 
Construction of an estimated 238,871 sq m (2.57 million sq ft) GLA of office space was completed in 2019. Available data on remaining office space under construction is estimated at 357,271 sq m (3.8 million sq ft) GLA, expected for delivery in 2020.
 
Median office asking rents declined by 6.9% YoY and softened 1.6% QoQ. The citywide median asking rent for a typical office size stood at Dh910 per sq m (Dh85 per sq ft). Office occupancy in Dubai was estimated at 83%.
 
As of November 2019, total stock of hotel rooms and hotel apartments stood at 99,215 rooms and 25,194 keys, respectively. An estimated 3,850 keys were added from a total of 16 hotels opened during the last three months of 2019.
 
Total international guests Jan-Nov 2019 reached 15 million, up 4.9% when compared to the same period last year. Citywide occupancy rate for the same period stood at 75%, dipping 1% YoY. Revenue per Available Room (RevPAR) and Average Daily Rate (ADR) witnessed double-digit declines on annual basis, falling 11.9% and 11%, respectively.
 
Industrial property prices remained relatively stable for the year end quarter with prices generally ranging between Dh1,507 to Dh3,121 per sq m (Dh140 to Dh290 per sq ft) in established industrial areas with modern and higher specification facilities priced at the higher range. Asking rental rates also remained relatively stable with quoted asking prices generally ranging between Dh200 per sq m to Dh540 per sq m (Dh19 to Dh50 per sq ft) depending on various factors such as location, size, condition and age of the building. – TradeArabia News Service



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