The recent drop in prices and rents is expected to help Dubai’s property market achieve more stability and balance, a senior executive has said.
Speaking to Gulf Business, chief executive of developer Deyaar Saeed Al Qatami said: “Today, if you go into the same building, you will see one tenant paying Dhs 55000 [annually] while another is paying Dhs 85,000. That’s because one tenant came in 2011 while the second moved during 2013 or 2014. That doesn’t make sense – [this kind of a difference] can’t go on forever.”
He added: “I hope that it is going to balance out – but if doesn’t, that means that the demand is still more than supply.”
Rents in Dubai have dropped by an average of 1.3 per cent during the first six months of the year, a report by Cluttons found. However, they remained stable quarter-on-quarter in Q3, CBRE’s latest report stated.
Meanwhile, residential sales prices fell 2 per cent quarter-on-quarter and 6 per cent year-on-year in the third quarter, the report added.
The report found that up to 62,000 new units – mainly apartments – are slated for delivery between Q3 2015 and 2018.
A lot of those new developments have been catered towards the affordable segment, because of the huge demand in the market.
There is strong demand from a leasing perspective and from an ownership perspective, since the majority of residents in the emirate belong to the mid-income segment, said Al Qatami.
But it becomes very difficult to define what constitutes affordable, he admitted.
“The question is – how do you make it affordable? In certain areas where the land prices are very high, it’s very difficult to make it affordable and hence it is always a challenge,” he said.
“It also depends today on the quality of living you want – sometimes you have to pay more to get the right product for yourself,” he added.