The downturn in Dubai's residential market, which has seen prices fall over a number of months, is nearing its end, according to a new report.
JLL's Q2 2017 Dubai Real Estate Market Overview report said the residential sector witnessed 5,400 completed properties being sold in the first five month of 2017, an increase from the 4,500 units that were sold during the same period of 2016.
It added that with little change in either sale prices or rentals recorded over the quarter, the residential market "remains relatively stable as the recent down cycle nears an end".
“The Dubai real estate market largely remained relatively subdued in Q2, market sentiment is however expected to become more positive in the second half of the year,” said Craig Plumb, head of research, MENA, JLL.
The second quarter of 2017 saw the addition of 3,600 units to the market.
A further 25,000 units are currently under construction and scheduled for delivery by the end of 2017, but only half of these are considered likely to be handed over to purchasers by year-end, JLL said.
The Dubai residential market has around 78,000 units under construction and scheduled for delivery by 2020, indicating a 15 percent growth from current supply levels, it added.
"With a forecast population growth of 3.5 percent per annum, this potential supply is in excess of the underlying level of demand and could therefore result in increased vacancy levels if it were all to be developed on schedule," noted JLL.
JLL said the Dubai residential sector has been a ‘buyers’ market’ over the past 2 years, with average sale prices for both villas and apartments declining between 5-10 percent in the year to mid-2016.
A year later, the picture is stabilising with prices declining by less than 1 percent in the year to Q2 2017.
JLL added that the next movement in price (up or down) will be dependent on how many of the potential supply of 78,000 units actually complete over the next 3 years.
"Our assumption that prices will see a marginal increase over the next 12 months is dependent on further delays to supply being experienced," its report said.
It added that rents continue to see single digit annual declines of 4.2 percent and 6.5 percent for apartments and villas respectively.
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