New units to hit Dubai property market recovery in 2017

The current deflation trend in the Dubai residential property market is expected to continue through 2017 as new units hit the market, according to consultancy CBRE Middle East.

In its end of year report, the firm said average residential rates declined 1 per cent in the city in Q4 2016, while mid single digit declines in values were seen year-on-year

Residential property values fell an average of 5 per cent annually dropping 4.6 per cent and 6.5 per cent for apartment and villas respectively, it said.

The company’s head of research and consultancy, Mat Green, said there were signs the transactional market was stabilising with no major changes in average sales rates during the last two quarters.

However, he warned that rapidly rising supply, with 70,000 units expected to be delivered between 2017 and 2019, could have a dampening effect.

“With an expanding pipeline of new units, current deflation trends are likely to continue throughout 2017, with many new homes set to complete,” he said.

Transactions data from Dubai Land Department released this week showed Dhs259bn of property deals were conducted last year, down 3 per cent on the Dhs267bn seen in 2015.

The number of transactions also fell from 63,719 to 60,595.

Read: Real estate transactions in Dubai hit Dhs259bn in 2016

In the office market, CBRE noted the difference in demand for prime and secondary locations.

Secondary locations saw a 12 per cent annualised decline in rents during 2016, according to the firm, due to persistent oversupply and softening demand.

Total office stock during the year rose to 9.1 million square metres compared to 3.0 million in 2007.

CBRE said future supply of 0.9 million square metres was expected between 2017 and 2019.