Dubai’s real estate market has continued to slide with prices down 8 per cent on average since June 2014, the Q2 report from consultancy JLL has found.
Apartment sale prices dropped 9 per cent year-on-year in Q2 and were down 1 per cent quarter-on-quarter. Meanwhile villa prices fell 2 per cent on a quarter-on-quarter basis and 5 per cent compared to Q2 2014.
The report comes even as official figures released by the Dubai Land Department show that residential transactions fell 66 per cent in value and 69 per cent in volumes year-on-year in the first half of 2015.
“These figures come as no surprise given Dubai’s residential market was booming over the first half of 2014, and units in the primary and secondary market were overpriced, so any year-on-year figures would be reflective of that,” the JLL report said.
Head of Research at JLL MENA Craig Plumb added: “The Dubai real estate market continues to face downward pressure during the second quarter of the year.
“However, the single digit price correction is in sharp contrast to declines we witnessed in 2008/2009 and is a clear indication that the market is maturing.”
The market faced strong pressure from growing supply – an additional 1,200 units were completed in Q2, increasing the total supply to 379,000 units.
A further 16,000 units are expected to enter the market by the end of 2015 although the delivery of some of the projects may be delayed as the market continues to face declines, the report said.
The significant drop in residential sale activity combined with the number of additional units scheduled for delivery over the next couple of years will depress sales prices further.
“We expect transaction volumes, and subsequently sale prices, to drop further in the second half of the year,” said Plumb.
A recent report by Core Savillis noted that residential prices in the emirate will continue to drop until early or mid-2016 before recovering in 2017, in anticipation of Expo 2020.
The poor performance of the property market this year has already caused a local real estate agency, S&K Estate Agents, to shut down and file for bankruptcy.
The company filed for bankruptcy on Tuesday July 21 and has been terminated, with all the 80-plus employees losing their jobs.