Prices across Dubai’s freehold neighbourhoods are continuing to weaken, while there are worsening yields for buy-to-let investors as declines in rental values outpace those in the sales market, according to a new report.
Propertyfinder Group’s UAE Real Estate Trends 2017 report said that amid the grim numbers, there are signs of recovery, with brokers reporting a bullish first quarter of 2017.
Covering the six-month period from September 2016 to March 2017 inclusive, Propertyfinder analysed the apartment market in 23 Dubai neighbourhoods and found that sales prices fell in 17 districts and rental values in 21.
For sales, Downtown Dubai remained the most expensive area in which to buy at AED2,182 per square foot, despite a 6.7 percent price decline, the largest drop in the apartment sector.
The report said price changes seem to have little connection to overall prices, with some of Dubai’s cheaper areas such as Dubailand (-3.5 percent) and IMPZ (-3.6 percent) also suffering some of the biggest falls.
Likewise, the six districts that bucked the negative trend appear to have little in common and include Sports City (+1.6 percent), Jumeirah Village Circle (JVC) (+4.1 percent), Greens (+0.1 percent) and Al Furjan (+0.7 percent).
Propertyfinder’s chief commercial officer, Lukman Hajje, said: "The report confirms what most have suspected; prices continue to ease, both in sales and rentals across most communities in the UAE.
"There are a number of elements at play - high levels of construction in the lead up to 2020 increasing supply and competition for buyers and renters; a new reality of oil prices at $50 per barrel; a historically strong dollar making UAE property comparatively more expensive despite the declines, and a historically low GBP and Euro encouraging British and European owners to liquidate their UAE property holdings to realise currency profits."
Dubai apartment rental values fell by a greater margin than sales prices in most areas, the report added, suggesting that landlords have proved more willing to cut their asking prices than those wishing to sell, and points to ebbing demand and over-supply.
In Abu Dhabi, villa sales prices fell in six of eight districts, including an 11.8 percent plunge in Al Raha Gardens, while villa rentals along with apartment sales and rentals were also predominantly in retreat.
“Rents continue to decline in Abu Dhabi where a reduction in government spending in direct correlation to sluggish oil prices has reduced employment and demand for housing in the capital,” the report added.
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