The sale prices of medium and low-quality residential units in Dubai will continue to drop further in the first quarter, mainly due to a surge in demand for high-end properties, said a Dubai real estate consultancy in its report.

Landmark Advisory, in its January Dubai sales guide said it has identified a significant price bifurcation based on quality, particularly in relation to the apartment segment of the market.

The present trend is a boost for Dubai property market as relative stability emerges for some selected assets, the report pointed out.

According to the report, the sale-change patterns in the fourth quarter of 2010 differed when it came to villas and apartments.

'Villa sale price performance was a function of location, with declines more significant in Central Dubai, where, for instance, prices in The Springs and The Meadows fell by over 12 per cent,' explained Jesse Downs, director of research and advisory services, Landmark Advisory.

'However, in other areas of Dubai there was little change. For example, four and five bedroom units in Victory Heights actually increased in price due to less supply available on the market,' she stated.

'However, the majority of these prices drops occurred in Q3, with Q4 itself being reasonably stable,' Downs pointed out.

“There is a high degree of oversupply already prevalent in the Dubai Market, and with a considerable amount of fresh supply due to come online shortly, this will only have an adverse affect, putting downward pressure on sale prices,” she observed.

“Although we have not seen as steep a decline in sales prices as we have with lease prices, there have still been significant reductions and, what is more, this has happened ubiquitously throughout Dubai,” Downs added.

According to her, the findings since August 2010 indicate that poor quality units have been the worst performing assets in the emirate.

“While price declines have also affected more attractive, better quality units, it is certainly not to the same extent,” explained Downs.

“For instance, during the Q4 prices for lower quality units in Dubai Marina fell up to 10 per cent, whereas higher quality units in the same area saw little or no decline,” she added.

The report said that apartment prices fell more consistently across Dubai, with quality seemingly the defining factor.

“Apartments are more susceptible to price declines dependent on quality, with greater supply leading to more choice for prospective buyers. This is further exacerbated by the fact that there are considerably more apartments than villas coming online in near future, increasing the existing oversupply and continuing to bring prices down,” Downs said.

On the commercial sector, the report stated that the maximum demand was for renting, with few transactions occurring for sales.

However, Landmark noticed some significant declines in prices, most notably in JLT due to the new supply recently delivered there.

Standard quality office space dropped as much as 30 per cent in some cases, with good quality space down as much as 15 per cent, the report stated. 

Commenting on the trend, Downs said, “While we are no longer seeing the same sorts of declines in sales prices that initially occurred post 2008, this is not to say that the market has fully bottomed out yet.'

'It is our belief that prices will continue to fall for a while. However, the relatively shallow declines seen in the last quarter represent something of a boost for the property market in the emirate,' she added.-TradeArabia News Service