Dubai’s residential real estate market saw further softening during the first quarter of this year, with prices decreasing marginally, according to the Q1 report released by property consultancy JLL.
The REIDIN sales index found that apartment prices fell two per cent quarter-on-quarter in Q1, while villa prices dropped by one per cent compared to Q4, 2014.
On a year-on-year basis, however, apartment prices rose by seven per cent, while villa prices were up six per cent, the index found.
Rents remained flat for apartments and villas on a quarter-on-quarter basis. Meanwhile apartment rentals rose nine per cent year-on-year while villas rents saw a two per cent growth, the index found.
Craig Plumb, head of Research at JLL MENA, said: “The Dubai real estate market continued to experience subdued activity during the first quarter of the year.
“We expect this trend to continue with average sale prices declining by up to 10 per cent during 2015. Sale prices normally move ahead of rents and this appears to be happening in the residential market in Dubai at present.
“While this is resulting in increased rental yields, this is likely to be a temporary factor with more attractive yields eventually increasing demand and therefore sale prices again,” he said.
Approximately 730 residential units were delivered across Dubai in the first quarter, while an additional 22,000 units are expected to enter the market by the end of 2015.
However the delivery of some of the projects may not occur within the specified timeframe, the report said.
The first quarter of the year also saw developers and government initiatives target the affordable housing sector, JLL said.
“As Dubai’s residential market moves towards a period of correction, the next driving force is predicted to be end-users or middle-income earners, as opposed to speculative buyers,” the report said.
On the development side, Nshama launched two phases of its Town Square project, Zahra & Hayat, consisting of townhouses and apartments below Dhs600 per sq ft.
The Dubai Municipality has also proposed to introduce mandatory affordable housing quotas for all new residential developments and has also allocated over 100 hectares of land for affordable housing across various locations, targeting buyers and tenants with monthly salaries of Dhs3,000– Dhs10,000.