Dubai property prices: Declines set to ease after 11% drop

Apartment prices in Business Bay and International City down 6% and 4% in Q2, says consulting firm ValuStrat

PHOTO: Dubai apartment asking rents dipped by 2% in comparison to the same period last year, and villa rents were down by 3%, ValuStrat data showed. Credit: Shutterstock

The decline in Dubai property prices is forecast to slow in the second half of 2015, after a “steady” 11% year-on-year drop during Q2, according to a report by ValuStrat.

The consulting firm, which tracks 26 key locations in Dubai, said apartment prices in the Business Bay and International City areas saw a decline of 6% and 4% respectively during the second quarter. Prices for villas in Arabian Ranches, Jumeirah Park and Al Furjan, saw a 3% decline, it said.

“The rate of decline is easing and is expected to continue to decelerate over the remainder of the year,” ValuStrat said.

Apartment asking rents dipped by 2% in comparison to the same period last year, and villa rents were down by 3%, the data showed – although rents remained unchanged since the beginning of 2015.

“In terms of housing supply, Dubai’s residential market anticipates a total supply of 26,100 apartments and 2,400 villas in 2015, bringing the total number to around half a million housing units,” the report noted. The second quarter saw 18 off-plan projects launched, adding 5,000 units to the residential pipeline by 2019.

“5,400 residential units were completed during the first half of 2015, a further 28,500 units are scheduled to complete in 2016. This is taking into account a number of projects with approximately 3,000 units originally scheduled for handover this year, moving their schedule forward for completion during 2016,” said Haider Tuaima, ValuStrat Research Manager.

There was a less pronounced impact on Dubai’s commercial-property sector, with office transaction prices down by 0.3% since last year and 1% since the first quarter, ValuStrat said.

The forecast for continued, if lower declines in the Dubai property market came as experts claimed the slowdown is a healthy sign stemming from stricter regulations, not the oil-price slump.

“Dubai residential property sales have declined over the past three quarters, but the drop in oil prices is coincidental and the slowdown is more due to big price increases in 2013 – the market is adjusting to return to affordable levels,” Nicholas Maclean, managing director of consultancy CBRE Middle East, told Reuters. “This is a positive trend and will help prevent a bigger correction in the future.”

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