Apartment prices in Dubai fell nearly six percent during the final quarter of 2010 as an oversupply of properties continued to hinder recovery, according to a new report.
Real estate consultants Landmark Advisory said capital values across all segments of the market in both Dubai and Abu Dhabi continued to decline during the period.
Prices for apartments in Dubai declined by 5.8 percent in Q4 2010 while villa rents saw a drop of 1.4 percent.
Landmark's study also indicated that apartment rents fell by 7.5 percent in the same period while rents for villas declined by 3.4 percent.
Saeed Hashmi, head of Valuation and Advisory at Landmark Advisory, said that while prices were still falling, there was a "significant spike" in apartment leasing volumes in the quarter.
He said this was due to a "combination of relocation demand from other Emirates in the UAE, coupled with people within Dubai looking to take advantage of declining rents".
Hashmi said the oversupply in Dubai's residential market would "continue to put downward pressure on capital values".
Activity in Dubai's office market remained slow in Q4, Landmark's report said, adding that oversupply was also hitting this sector.
In Abu Dhabi, Landmark said it was difficult to analyse the residential market in isolation because although it is currently undersupplied, it continued to behave as if it is oversupplied.
Hasmi said transactions levels in the capital remained low despite prices in some developments falling 17 percent compared to Q3.
Rental declines were also witnessed, with a six percent decline - resulting in a cumulative fall of 31 percent over the year.
Hashmi added that while capital values and rents continued to fall in Q4 2010, sentiment overall improved and there were signs of investors reconsidering the UAE, in particular Dubai, as a place to invest again.
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