Property sales down in prime Dubai areas
‘Tough market conditions’ see transaction volumes drop by as much as 44% in pricier parts of the city – report
The number of property transactions in the most expensive areas of Dubai has fallen – with sales volumes of prime villas on Palm Jumeirah down 44% over the last year, according to new research.
“Tough market conditions” have hit sales numbers in some of the most expensive parts of the city, according to Core, the UAE Associate of Savills.
Palm Jumeirah villa transactions dipped approximately 25% over the last 12 months, with sales of those costing more than AED 10 million down by 44%, the property services firm said. Actual prices proved fairly resilient, with Palm Jumeirah villas being sold for around 4% less than last year.
“With a total stock of approximately 1,700 villas, an estimated 150-200 villas are currently available for sale on Palm Jumeirah. More units are anticipated to be held by investors as many are not pressed financially to sell in this bottoming market, while a few others look towards commanding premiums by refurbishing existing units and attracting buyers who are seeking contemporary products. A strong recovery in prices is not anticipated in the near term as we expect this underlying stock to keep the sales prices static even if the demand revives in the coming quarters,” said David Godchaux, CEO of Core.
Other prime areas such as Al Barari, Dubai Marina and Downtown also saw lower sales volumes, according to the ‘Established Prime Residential Markets in Dubai’ report for the second quarter of 2016.
Sales transaction activity levels in Dubai Marina dropped 25%, with prime apartment sales volumes falling 43% year-on-year, Core said.
“However, Dubai Marina witnessed the highest transaction activity in the apartment segment over the last few years. As expected, headline occupancy levels are nearly 90% in top performing towers and the prime rental market has remained relatively steady due to the continued demand from expats. Nonetheless, prime sale prices have dropped 8% year-on-year, although this has created investor opportunities through stable yields averaging between 5-6%,” says Mr Godchaux.
Dubai’s Emirates Hills district bucked the trend, seeing the highest transaction volume among all prime villa districts in the last four quarters, Core said. Villas worth more than AED 10 million in the area saw approximately 45% higher year-on-year transactional activity levels. Villa sales prices and rents in Emirates Hills have followed almost identical trends, something Mr Godchaux said he expects to continue.
The report also revealed that prime residential prices in Dubai are 60% below those in New York, 75% below London and 85% below prime Hong Kong property prices.
“Aided by the current softened sales market, potential capital appreciation and higher long-term yields, Dubai’s prime residential real estate is extremely good value by global levels,” says Mr Godchaux.
“With no holding charges and comparatively lower transaction costs, Dubai stacks up favorably against other competing global cities as an investment destination for global UHNWI and investors.”
