Core Savills says areas like Jumeirah Village and Dubailand to see price drops; 20,000 units to be delivered to market in 2017
Dubai residential rents could fall by up to 4% in some areas during 2017 as more units are delivered to the market, Core Savills said.
Areas such as Jumeirah Village and Dubailand are expected to see rents drop by 2% to 4% as more new developments are delivered, the real estate firm said. “However, limited new supply, coupled with consistent demand, will keep rents in prime and central residential districts flat throughout 2017,” it added.
This year saw rental declines across the board, in areas like Business Bay (where prices fell by 3%), The Greens (-2.5%), Discovery Gardens (-2.5%) and Dubai Marina (-2%). Jumeirah Lake Towers (JLT) and Jumeirah Village were the only districts to mark a marginal rise (1%).
Villa rents also displayed drops, with Palm Jumeirah and Arabian Ranches down by 5%; and The Springs and The Meadows, Al Barari and Emirates Hills all down by 3-4%.
“We continue to see rents in lease renewals to be market down or at least see no change. The trend of tenants moving out to outer areas, trading connectivity for larger units, exists, however, it is still slow as the cost offset doesn’t match up to the inconvenience and charges incurred,” said Core Savills CEO, David Godchaux.
In contrast, sales prices are expected to rise over the next year off the back of landmark developments being delivered such as Dubai Water Canal, coupled with continued infrastructure spending on a robust pipeline of projects like Al Maktoum Airport, Dubai Parks and Resorts, Dubai Creek Harbour and Bluewaters Island, leading up to Expo 2020, Core Savills said.
Mr Godchaux said: “Considering the current drivers and deterrents illustrated, we predict an uptick in Dubai sales prices in 2017 as a revival is clearly underway, however, an overall rise is expected to be very gradual. We foresee few submarkets to underperform – particularly the affordable and low-mid market segment are likely to be negatively impacted by the large amount of pipeline supply. Nonetheless, this effect may relatively balance out with the overall positive market sentiment coupled with the fact that developers continue holding back stock to align demand with absorption.”
Over 20,000 units are forecast to be delivered in 2017, with just 19% expected to be of prime residential stock, compared to over 30% in 2016, Core Savills said.
“Although lagging in recovery, limited supply and sustained demand is expected to cast steady upward pressure on the prime segment by mid-2017,” added Mr Godchaux.