Residential values already down 2.2% during first quarter
Property prices in Dubai are set to decline further in 2016, after a 2.2% drop in residential values in the first quarter, according to a Cluttons report.
Villa sales prices are expected to fall by another 5% this year, while apartment values are set to fall by between 3% and 4%, the real estate consultancy said.
The 2.2% drop during the first quarter “marks the strongest quarterly decrease in average residential values in five years and the seventh consecutive quarterly decline, highlighting the challenges faced by both the apartment and villa sales markets,” Cluttons said.
The decline in property prices follows the 3.1% drop seen in 2015, according to the Cluttons’ Dubai Spring 2016 Residential Property Market Outlook.
The first quarter saw a 2.7% drop in rents, with a further drop of 3% to 5% expected later in the year, the real estate consultancy said.
“We’ve been carefully monitoring the declining residential values over the past two years, but the persistent headwinds to local and global economic growth are continuing to erode overall demand and capital values are still softening, albeit at a slightly quicker rate,” said Faisal Durrani, Head of Research at Cluttons.
Apartment prices proved more resilient than villa values in the first quarter, the research found.
“In the villa market for example, values at the end of Q1 2016 stood at an average of close to AED 1,375 psf, which represents a near 3% decline since the end of 2015. The latest change means villa prices are nearly 7% down on this time last year,” said Durrani.
“With the exception of Hattan Villas at The Lakes, every villa submarket that we track registered price falls in the first quarter. Looking back at 2015, the market registered a 5.6% fall in prices in line with our expectation of a drop between 5% and 7%, which Cluttons predicted back in 2014. During 2016, it is our view that a further decline of around 5% is likely on average, with some villa submarkets likely to see price falls of up to 7%.”