Dubai apartment prices down 11%, set to fall further – JLL
Tighter regulations, higher inflation and a stronger dollar expected to push prices down further
Dubai apartment prices fell by 11% in the year to August, with rents also down by a fraction, according to a report by JLL.
In its third quarter market overview, the real estate consultancy noted that the downward trend had continued due to tighter governmental regulations, higher inflation levels and a stronger dollar, which has made property more expensive.
This has resulted in a decline in the volume of transactions, with JLL also predicting that residential prices will continue to soften over the rest of the year and into 2016.
Apartment sales prices were down by 3% in the third quarter, when rents dipped by 1%. Villa prices were down by 7% in the year to August, with rents down by 2%, JLL said.
Craig Plumb, Head of Research at JLL MENA, said: “The Dubai real estate market continued to experience a slowdown in performance during the third quarter, a trend which is expected to continue over the remainder of 2015. Residential sale prices continued to decline… For the first time, rental prices have also declined (albeit marginally) over Q3.”
Hotels also underperformed in the third quarter, although that was mainly due to the seasonal nature of tourism in Dubai, the report noted.
Occupancy rates registered at 77% in the year to July, while the average daily rate dropped 7% year-on-year, and revenue per average room dipped by 9% over the same period.
“The hotel market continued to witness a slowdown in performance, partly attributable to a decrease in the number of tourists from Russia, South Asia, Far East Asia and Africa visiting Dubai. Despite this, occupancy rates are still high when compared to other international markets, but we expect this to soften with the delivery of an additional 450 rooms at the Intercontinental in Dubai Marina, Ibis Styles in Jumeirah and Hyatt Place in Deira,” Plumb remarked.
The report said retail activity in Q3 was also subdued, with annual rental growth rates across all mall types slowing, and expected to drop further in the next quarter and in 2016.
“The retail market remained subdued over the third quarter as annual rental growth rates across all mall types continued to slow down. There are signs that landlords have recognised this softening and have adjusted rental levels to more realistic levels in order to differentiate their offerings in the face of strong competition. We expect rents to drop over the 12 months as the market moves through its cyclical peak,” Plumb said.
