Dubai house prices slip 2% in Q3, further falls likely this year

New CBRE report says stabilisation set to continue as 20,000 new units enter the market
Dubai house prices slip 2% in Q3, further falls likely this year
By Staff writer
Mon 07 Sep 2015 01:51 PM

Average rents in Dubai remained stable during the third quarter of 2015, although the market is highly fragmented with some affordable locations achieving growth and others experiencing more pronounced drops, according to real estate consultancy firm CBRE.

Its report said there was further compression within the sales segment, with sales rates declining by around 2 percent from the previous quarter and by around 6 percent year-on-year.

Mat Green, head of research & consultancy UAE, CBRE Middle East said: "While global economics have reduced investor sentiment and partially impacted Dubai's residential sales, the slowdown is largely attributed to a price correction resulting from market stabilisation.

"In light of lower activity, developers are incentivising sales by offering more flexible payment plans, some of which are back-loaded and provide post-handover payment options."

He said the residential sector is likely to continue to stabilise in the coming months with nearly 20,000 new units set to enter the market during the course of the year.

Green said the market will see a higher proportion of residential projects being launched at lower price points, inducing the drive to affordability in the sales market.

"This is a positive trend and will help prevent a bigger correction in the future," he added.

According to CBRE, the Dubai office segment witnessed steady rental conditions amid limited supply growth and pending market maturity. Prime office rents remained unchanged for the sixth consecutive quarter, while secondary locations have witnessed marginal growth.

Single-held quality office assets continue to generate high demand from corporate occupiers, although the market is being held back by the lack of good quality supply being delivered, the report said.

It added that this will start to change from 2016, with the delivery of One JLT and Dubai Trade Centre District Building C1, both of which have generated high levels of pre-leasing activity, which broadly reflects the maturing nature of the Dubai market.

CBRE said Dubai's retail sector recorded steady performance during the first three quarters of the year, with major shopping malls demonstrating high occupancies along with stable lease rates.

Strong consumer demand from UAE residents and international tourists has functioned as a catalyst for the sector's growth and Dubai is now home to 56 percent of the world's retail brands, ranking second only to London.

Development activity remains buoyant with 620,000 sq m of leasable area set to enter the market in the coming four years.

"A growing resident population combined with high per capita income have contributed to robust growth within the retail sector. Dubai remains a top destination for retailers, functioning as a gateway city for brands seeking to establish a presence in the region. However, on the consumer side, reduced economic sentiment amid lower oil prices, coupled with lower tourism demand could constrain spending from residents and tourists alike," added Green.

For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.