Property

Rents remain unchanged in Dubai’s prime areas – Chestertons

About 3,000 units are expected to enter the market this year

PHOTO: The Jumeirah Golf Estates community saw a rent decrease of 2% in the last quarter. Credit: Jumeirah Golf Estates

Rents for the majority of apartments in prime areas of Dubai were unchanged in the fourth quarter of 2015, according to Chestertons.

Locations such as Jumeirah Park, Jumeirah Islands and Jumeirah Golf Estates, however, saw slight rental decreases of 3%, 2% and 2% respectively, the property management firm noted in its latest MENA Observer Report.

The villa segment also saw a decrease of 1% in rental prices in Q4 2015 as compared to the previous quarter.

“The residential prices dropped in the last quarter and that has made the yields attractive. Apartments provided higher average yield than villas,” said Declan McNaughton, managing director, Chestertons UAE.

International City and Discovery Gardens saw the highest yields for apartments. Meanwhile, the villa segment provided a 5% yield as the market witnessed a decline in both rental and sales prices.

“Mudon, The Springs and Victory Heights were found to be a cut above the average yield,” McNaughton said. “However, we expect the market to remain sluggish during the first quarter of 2016 due to a combination of factors including lower oil prices, dollar appreciation and regional economic uncertainties.”

According to the report, the apartments sector accounted for 64% of the transactions in the last quarter of 2015. Meanwhile, mortgages during the same period dropped by 43%, indicating that end user demand for residential properties is slowing down.

“Property prices have corrected significantly over the last year with attractive bargains in some locations. With high rentals, this is an apt time to lock a property that will bring good yields,” McNaughton noted.

“There is a general consensus in the industry that the market will remain subdued during 2016. However, this phase could provide good investment opportunities for the long-term,” he added, pointing out that the current subdues phase will not last long as Dubai edges closer to Expo 2020. “This is an ideal market for both end-users and long term property investors.”

Approximately 3,000 more units are expected to enter the market in Dubai this year, the report said. However, imbalance in supply and demand will continue to build pressure on property prices across the emirate. Sales prices, therefore, are expected to correct further during the year, said Robin Teh, country manager, Chestertons UAE.

“In 2015, an estimated 15,000 units were delivered in Dubai. We are likely to see a similar number being delivered over the next three years, following which supply may reduce significantly. Master developers could alter the construction and delivery cycle accordingly and this could keep the supply figures under control,” Teh said.

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