Sales values in Dubai’s real estate market declined 3.5 per cent year-on-year in the first quarter of 2016, but there were signs of improving conditions, according to a new report.
Real estate consultancy ValuStrat’s Dubai index saw the first increase in two years, jumping from 97.9 in January to 98.0 in February and March.
The company also found that more end users were looking to get on the property ladder to save on monthly rental expenses. Sales values in the apartment market improved 0.1 per cent quarter-on-quarter but declined 0.2 per cent for villas.
The median apartment value in the emirate last month was Dhs 14,198 per square metre compared to Dhs 14,650 psm for villas, according to the company.
It said median residential prices of registered transactions were 10.4 per cent lower year-on-year in Q1 and 2.5 per cent lower quarter-on-quarter.
However, high-end villas priced at more than Dhs 10m saw double the number of transactions compared to the previous quarter and the share of villa registrations increased from 5.7 per cent in the last quarter to 11.1 per cent in Q1, ValuStrat research manager Haider Tuaima said.
The company forecast 33,662 apartments and villas would be completed this year, but warned this could be adjusted downward as projects are delayed.
“Much of the 2016 supply comes from completions carried over from last year. Eight off-plan residential projects were launched in Q1, to add more than 2,000 units to the residential pipeline by 2021,” it said.
In the office market, declining conditions continued with transactions falling by 9 per cent year-on-year and 3.1 per cent quarter-on-quarter.
Median asking rents in Q1 remained relatively stable at Dhs 1,184 per square metre, according to the company. Dubai also saw an additional 38,000 square metres of retail mall gross leasable area added this quarter after the opening of The Mall in Jumeirah.
In hospitality, ValuStrat said there were 98,333 hotel rooms and apartments in Dubai at the start of the year and five hotels with 1,581 units were added in Q1. These included one five-star, with the remainder three- or four-star.
However, the market was showing signs of strain, with average occupancy declining 2 per cent year-on-year in January and February to 85 per cent. There was also a 11.7 per cent decline in hotel average daily rate and a 13.3 per cent decline in revenue per available room year-on-year.
ValuStrat said 15 new hotels would add 4,086 keys to the pipeline over the next three years.