Residential property prices in Dubai fell for the sixth consecutive quarter during Q2 2016, as the market continues to witness a slowdown, according to the latest report by real estate consultancy CBRE.
Average sales rates dropped 2 per cent quarter-on-quarter and 12 per cent year-on-year, with higher-end and luxury residences witnessing the most significant drops.
“Prices within the mid-market segment have proven to be far more resilient to this downward rate trend, reflecting the current demand for affordable accommodation in freehold communities,” the report said.
However, even the mid-market segment saw rents drop in locations such as Al Barsha, Oud Metha and Bur Dubai, “reflecting the higher availability of units in the market.”
Meanwhile, average residential rental rates during the quarter declined by around 1-2 per cent year-on-year.
Prime residential locations such as Downtown Dubai and Dubai Marina as well as secondary locations such as IMPZ, Dubai Sports City and International City saw rents decline in Q2.
The devaluation of major currencies against the US dollar, spurred by global economic uncertainty, has impacted investor sentiment in the emirate’s real estate market, the report said.
“Amidst ongoing economic uncertainties, redundancies and lower accommodation budgets we can expect to see further softening of demand levels and sales rates in the short-term, especially for higher-end and larger units,” it added.
Sales rates are predicted to drop further by an additional 3-5 per cent in the coming quarters although some locations may vary.
Mat Green, head of Research and Consulting UAE at CBRE Middle East said: “It is estimated that around 48,000 new residential units (apartments and villas) could enter the Dubai market during the period 2016 to 2018, provided that construction delays are at a minimal.”
“This is broadly comparable to five-year average supply. Much of the upcoming housing is expected to be delivered in secondary and tertiary locations such as Dubailand, Jumeirah Village, Business Bay and Dubai Silicon Oasis.”
Dubai’s property market has been seeing a decline in prices since last year following a sharp rise in rates during the previous years.
However, several developers have expressed confidence that the market will pick up soon.
Earlier this week, Dubai businessman Khalaf Al Habtoor predicted that property prices will increase in the “coming months” due to heightened demand for landmark projects in the city.