Construction & Real Estate

Dubai's residential capital values down 13.8pc in December

The residential capital values in Dubai for December registered a 13.8 per cent drop compared to the previous year, standing at 65.3 points. It fell 0.1 per cent on month-on-month basis, thus clocking the lowest rate of decline in three years, according to leading UAE-based local consulting firm ValuStrat.
 
The citywide capital values of residential homes approached stabilisation, as the downward trend gradually came to a standstill, stated the top consultancy.
 
Stability and marginal improvements in capital values were observed in 90% of established villa communities as well as 63% of free-hold apartment areas, it added.
 
According to ValuStrat, the residential rental VPI in Dubai stood at 62.1 points, declining 2% quarterly
and 12.3% annually. Dubai’s net yields averaged 6.1%, for apartments at 6.3% and villas with 5.1%, it stated.
 
VPI for Dubai’s office capital values stood at 59.4 points, suggesting that average capital values were 10.4% lower than Q3 2019 and 1.3% below the previous quarter.
On its review for 2020, ValuStrat said a year like no other - it began with investments in Dubai’s residential property market on a growth trajectory, but this was quickly cut short by the Covid-19 pandemic and resultant lockdowns and movement restrictions. 
 
The first casualty of the Covid crisis was leading Dubai developer Emaar Properties which suspended the launch of all new projects as the pandemic exacerbated property slump.
 
With limited new project announcements, record low prices, and increased mortgage loan-to-value (LTV), the sales transactions involving ready-to-move-in homes hit a eight-year high for the fourth quarter, stated the consultancy.
 
ValuStrat pointed out that around 65% of December’s cash-based sales transactions volume were directed towards ready-to-move-in homes.
 
The top off-plan locations transacted during December were in the prime localities of Jumeirah Village, Meydan City, Al Jaddaf and Dubai Science Park.
 
The most transacted ready homes were located in Dubai Marina, Jumeirah Village, Business Bay, Arjan and Green Community West, said the industry expert.
 
Residential capital values for the first time in several years began to stabilise, with some areas witnessing gradual price growth. This later led to a V-shape recovery in terms of home sale transaction volumes, it stated. 
 
ValuStrat pointed out that during the fourth quarter, several key construction projects got completed. These include the two highway extensions to E611 and construction for Sheikh Mohammed bin Zayed – Al Rebat roads intersection by RTA.
Nearly 70% of infrastructure work for the Mohammed Bin Rashid Aerospace Hub (MBRAH) has been completed in addition to AED4.6 billion roads and bridges projects in Jebel Ali area.
 
On the 2021 outlook, ValuStrat said, subject to the health crisis being resolved, the economy is expected to improve with added momentum from the Dubai Expo and 50th anniversary of the UAE. 
 
Market sentiment is predicted to pick-up during the next 12 months, with some villa and apartment values possibly already at bottom, added the industry expert.