The total residential transaction volumes in Dubai's residential sector for the last quarter grew 30 per cent over the third quarter of 2016,  according to the leading international property agency Chestertons.  

With approximately 3,000 residential units entering the market in Q4 and bringing the estimated total residential supply in Dubai to 472,000, the market has witnessed an average drop of three per cent in apartment sale price and six per cent for the villas.

The average apartment and villa rents fell by two per cent in Q4 and three and five per cent respectively for the year, stated Chestertons in its Q4 2016 Dubai Residential and Office report.

This has resulted in the emirate becoming the preferred option for many tenants.

Dubai Marina, International City, Dubai Sports City, Emirates Living and Jumeirah Lake Towers were the top five locations in total transaction values and volumes in Q4.

With 416 transactions worth Dh724 million ($197 million) in the fourth quarter, Dubai Marina topped the residential sector list, it stated.

The Chestertons report revealed that the total residential transaction volumes and total value of transactions increased by 30 per cent in Q4.

“This is a possible indication that the gap between what a seller expects to achieve and the amount that a buyer is actually willing to pay is closing still further,” remarked Robin Teh, the country manager (UAE) & valuations and advisory director, Mena.

“The average drop in sales prices in areas such as Dubai Marina, Emirates Living and JLT have made these locations more attractive to potential homeowners who may have previously been tenants. While International City remains an attractive area for investors, Dubai Sports City provides affordable units which have grown in demand over the last couple of years,” he noted.

Teh pointed out that residential cash sale transactions had hit Dh18 billion ($4.9 billion) in 2016, although this was an overall drop of 25 per cent from 2015.

Interestingly, the Chestertons report showed an increase in mortgaged purchases, which points towards more owner/occupiers buying property in Dubai.

Apartment sales prices in the emirate in Q4 fell marginally across the board by one per cent on average, while year-on-year there was an average decline of up to three per cent, said Teh.

The worst performing area was Dubailand, where the average sale price for apartments fell by as much as 4 per cent in Q4 compared to the previous quarter, and 9 per cent overall for the year, he added.

Chestertons said villa sales prices decreased by an average of two per cent in Q4 and 6 per cent overall for the year. Villas in Al Furjan saw a marginal drop from the previous quarter, but recorded a marked nine per cent fall in prices through 2016; while prices in Jumeirah Park declined by five per cent from Q3 and 7 per cent year-on-year.

The price of villas in The Lakes and Arabian Ranches fell two per cent over the quarter and six per cent overall for the year. Only villas on Palm Jumeirah showed any signs of price increase (1 per cent) from Q3 to Q4, while remaining stable for the year, stated the expert.

“Real estate prices dropped at a slower rate during 2016 as the ripple effect of global and economic uncertainty continued to impact the market in Dubai. We expect this to continue into the first half of 2017 and prices to remain flat,” said Teh.

On average, there was a 2 per cent drop in apartment rents for Q4 across all areas and a 3 per cent decline year-on-year. However, apartments in JLT and Business Bay fell by 8 per cent over the course of the year and DIFC by 7 per cent over the same period. Only Downtown Dubai held its rental rates from 2015.

Average villa rents in the emirate also fell - 2 per cent from Q3 and 5 per cent annually. JVT, Al Furjan and Arabian Ranches all saw a 5 per cent drop in rents in Q4 compared to the third quarter, with JVT experiencing a 10 per cent fall overall year-on-year. Rents in Jumeirah Golf Estates dropped 9 per cent over the year.

"Demand remains relatively stable in the rental market, with tenants having more options of locations as rents dropped in 2016. We expect the downward pressure on rents to remain throughout the first quarter of 2017 with prevalent private and government cost-cutting measures prevailing along with employment instability in the labour market," remarked Teh.

According to him, the office rentals showed a slight drop in Q4 compared to the previous quarter and, overall, fell by as much as five per cent in 2016 in Business Bay, with only office properties in DIFC remaining unchanged over the year.

“We expect the office market to remain flat in the first half of 2017,” he added.-TradeArabia News Service