House price growth in Dubai continued to slow during the second quarter of 2014 but may pick up after the summer, Asteco said in a new report on Monday.
Residential sales performance for Dubai witnessed growth of six percent and three percent respectively for apartments and villas in Q2, Asteco said, adding that it anticipates renewed interest and activity in Q3.
The report said activity in the first half of 2014 was marked by "sector stabilisation and consolidation as the market continued to absorb the rapid growth witnessed in 2013".
According to the Asteco Dubai Q2 2014 report, interest shifted to peripheral communities such as Jumeirah Village, Dubai Sports City and Dubai Silicon Oasis, as many prospective purchasers remained priced out of the more popular areas of the city such as Downtown Dubai and Dubai Marina.
"We recorded positive growth rates of around 10 percent in Q2 for these areas, but at the same time there was a decline in interest in the previously popular affordable communities of Discovery Gardens and International City, which only registered minimal growth, indicating that they are now topping out price-wise and any further growth will take them out of the affordable bracket," said John Stevens, managing director, Asteco.
Stevens added that sellers who raised their prices following the Expo 2020 announcement are intent on maintaining their position, which has resulted in a reduction in transaction levels, especially for higher priced properties within established communities.
In terms of apartment sales, the top performers in Q2 were Downtown Dubai and Jumeirah Beach Residence, both up by 11 percent while Dubai Marina and Downtown Dubai led year-on-year growth at 62 percent and 52 percent respectively, Asteco said.
It added that Jumeirah Village also showed 46 percent year-on-year growth.
The communities leading villa sales in Q2 were Victory Heights and Palm Jumeirah, with eight percent and three percent increases. Palm Jumeirah recorded a 55 percent increase over the last 12 months while the newer Al Furjan community jumped by 44 percent, the report added.
"We anticipate that post the summer months, there are likely to be several new project announcements that will test demand in the market, giving buyers new opportunities to invest," Stevens said.
Asteco said the rental market was dominated largely by demand from new arrivals into Dubai, with apartment rates increasing by four percent in Q2 and villas by five percent.
"With rents increasing steadily since 2013, many existing tenants have elected to remain where they are and absorb the rent increase, as indicated by the RERA rental index, rather than start from scratch and incur the cost of moving, agent commissions," said Stevens.
Apartment rental rates grew most during Q2 in Jumeirah Beach Residence where the annual rental rate for a two-bedroom unit increased by 10 percent, Asteco said.
International City recorded the highest annual growth at 66 percent, the report said, adding that villa rental rates grew by five percent, on average.
Asteco said it predicts an increase in enquiries and transactions post summer for commercial property in the emirate, supported by ongoing economic improvements and activity on the part of companies budgeting for the year ahead, and those expanding or relocating and in the market.