The market is showing signs of bottoming out after a 17% decline in transaction levels, says Asteco
Property prices and sales transactions in “affordable” areas of Dubai are picking up despite the ongoing declines in most other areas, according to a new report.
International City, known for its cheaper property stock, had the highest number of transactions recorded in the first quarter of 2016, according to Asteco. Interest from buyers pushed up prices by 1%, “further underscoring the demand for affordable housing”, the real estate company said.
IMPZ and Jumeirah Village also notched up quarter-on-quarter price increases of 4% and 5% respectively, Asteco said.
These cheaper areas bucked the trend in the overall Dubai market, which saw prices drop by 5% year-on-year and transaction levels fall by 17%.
“This market has moved favourably towards the buyer as prices drop and cash investors and end-users find themselves in a strong negotiating position,” said John Stevens, Managing Director of Asteco.
“Buyers are definitely considering their investment options as the market appears to be bottoming out and sellers seem prepared to take a more realistic view on pricing.”
The most transacted areas in terms of value during the first quarter included Dubai Marina, Palm Jumeriah and Downtown Dubai. But apartment sales prices in these locations were down by 4% or more, Asteco said.
The villa market experienced a similar trend with sales prices down on average 6% compared to last year, and down 2% when compared with the fourth quarter of 2015.
Many property developers in Dubai have started building “affordable” developments, with some offering instalment-based payment plans that do not require mortgages.
“Newly launched properties with more affordable price points and payment plans are attracting investment interest and are selling very well,” said Stevens. “The reputation of the developer is also playing a major role as investors and end users want to be certain that their properties will be delivered as agreed and the required infrastructure and community facilities completed.”
A separate report, published yesterday, said the annual rate of decline in Dubai property values was even higher than 5%, Asteco’s estimate for the first quarter.
The property information service Reidin said the Dubai sales market dipped 0.53% in April, with prices now 7.5% lower than in 2015.