The sales prices in Dubai's rental market continue to fluctuate with the average sales prices of apartments falling by three per cent, while the rates of villas remain stable, according to a report by leading real estate consultancy Asteco.

The year-on-year figures reveal eight per cent average decline in apartment and villa rentals, stated the property expert in its latest Q1 2017 Dubai market report.

During the first quarter, tenants remained budget-conscious, taking advantage of additional supply and competitive rates to relocate to new properties or negotiate existing contracts, placing downward pressure on rental rates, it said.

In contrast, sales prices in communities with good infrastructure, amenities and limited future supply potential recorded marginal increases, it added.

According to Asteco, villa sales prices in The Meadows and The Springs, for example, were up eight per cent and five per cent respectively from the first quarter of 2016.

"From a sales perspective, apartments witnessed declines across the board. However, it was the upper-end of the market that felt the impact most acutely, with both Downtown Dubai and Dubai Marina seeing year-on-year decreases of 7 per cent," stated John Stevens, the managing director, Asteco.

"The villa sales market fared better as some of the established communities with good transport links and within proximity to DMCC and Media City, and those with good amenities including shops and restaurants, witnessed increased demand resulting in price growth," he added.

Overall, Asteco’s research identified a one per cent quarter-on-quarter (q-on-q) decline in apartment sales prices in the first three months of the year. Since Q1 lats year, the market recorded a drop of three per cent in rates.

"We have, however, noted increased transaction activity in Q1 compared to the same period last year. Developers continued to launch off-plan properties at competitive prices and payment plans indicating healthy investor demand and further promoting movement within this sector," observed Stevens.

Apartments on Palm Jumeirah witnessed no change annually, whilst q-on-q sales prices were down three per cent. The villa sales prices recorded a q-on-q decline of one per cent, while annually the figures saw little movement.

This was attributed to an increase in supply in surrounding neighbourhoods providing greater opportunities at lower prices.

On the apartments scenario, Asteco said the rental rates fell three per cent on average q-on-q and eight per cent over the year. High-end properties were most affected with Palm Jumeirah witnessing price declines of seven per cent q-on-q and 14 per cent annually.

In DIFC there was no movement for quarterly prices, however, annually the figure dropped by nine per cent.
Mid-market apartments followed suit, witnessing quarterly and annual declines of 3 per cent and 12 per cent in Business Bay and 2 per cent and 4 per cent in Jumeirah Lakes Towers, it stated.

According to the expert, Discovery Gardens was the only area to notch an increase in the affordable sector with an annual rise of three per cent.

"A combination of new supply and tenants taking advantage of competitive rates has resulted in landlords offering more flexible terms either by increasing the number of cheques or, in some instances, offering rent free periods," remarked Stevens.

"This has been compounded by the addition of 3,600 apartments in Q1, which is expected to top 17,000 by the end of the year, thus putting further pressure on the rental market, he added.

In the villa rental market the trend was similar to apartments with declines of 3 per cent q-on-q and 8 per cent annually as tenants took advantage of increased availability of competitively priced properties, said the Asteco in its report.

Rental rates are expected to decline further as 4,000 villas are scheduled to be delivered by the end of the year, which are likely to be leased below prevailing rates to improve take-up, it added.-TradeArabia News Service