Dubai property prices and rents continued to decline in the second quarter with little sign of the trend reversing, according to Asteco
In its quarterly report, the real estate firm said average quarterly sales prices were down 3 per cent for apartments, 2 per cent for villas and 2 per cent for offices.
For the former the decline was attributed to the rising number of affordable project launches and completions, with developers offering smaller apartment units at lower price points and more flexible payment terms. This resulted in a 3 per cent fall at the high end and 2 per cent decline in the mid-market.
By area, apartment prices remained flat in DIFC, Jumeirah Beach Residence, Palm Jumeirah, Business Bay and the Greens while International City and Dubai Marina saw declines of 7 per cent, Jumeirah Village and Discovery Gardens 6 per cent and Downtown 5 per cent.
Villa sales prices were similarly down 2 per cent on average with no change in Dubai Sports City, Jumeirah Park and Palm Jumeirah and prices up 2 per cent in Arabian Ranches.
However, prices were down 6 per cent in Jumeirah Village, 4 per cent in the Meadows and a substantial 9 per cent in the Springs.
In the rental market apartment rates were down 2 per cent quarter-on-quarter and 7 per cent year-on-year with Asteco noting 17,700 units of new supply anticipated to enter the market from 8,750 in 2016.
The firm said a number of these units would likely be offered at discounted rates to encourage sales.
By area, apartment rents were down the most in Downtown Dubai at 6 per cent, followed by 4 per cent in Jumeirah Beach Residence and the Greens.
Year-on-year rents were down 14 per cent in Business, 12 per cent in Downtown, 11 per cent in Deira and 9 per cent in International City.
“We do not expect the market to recover until economic sentiment improves in line with increased government spending, further implementation of diversification strategies and the anticipated gradual rise in oil prices. In the meantime, tenants will be able to take advantage of the additional supply across apartments, villas and offices,” said John Stevens, managing director, Asteco.
For villas, rental rates remained stable in Mirdif and Al Barsha but softened elsewhere. Rents in Palm Jumeirah and the Springs were down 4 per cent while there were notable year-on-year declines of 16 pent in the latter, 14 per cent in Jumeirah and 13 per cent in Palm Jumeirah and Arabian Ranches.
Similarly commercial rents were down 2 per cent quarter-on-quarter and 3 per cent year-on-year, although demand remained stable for small, fully-fitted and serviced office units at competitive rates, according to the firm.
It estimated there was 2.5 million square feet of leasable space scheduled to enter the market in the second half, significantly less than the 4 million square feet seen in 2016.
Stevens said conditions had strengthened the negotiating position of residential and commercial tenants with many seeking better terms or opting to relocate if landlords failed to meet their demands.
“The second half 2017 will see the delivery of a significant number of new units/floor space and we anticipate that this new supply will amplify current trends,” he added.