By Ed Attwood
Villas and apartments back on downward trend after relatively promising October
House prices in Dubai still do not appear to have found a bottom, according to the latest November research from REIDIN.com.
The research agency has said that overall residential sales prices were down by a nominal 3.2 percent month-on-month in November.
Apartment prices dropped by 1.12 percent, while villa prices dropped by 0.81 percent.
On a year-on-year basis, values dropped by just under 14 percent since November 2009.
The news is especially disappointing given REIDIN.com’s October figures, which showed that the cost of villas had actually risen fractionally by 0.04 percent.
The only area of the property market to see an increase in value was the 51-100 square metre segment, which rose by a nominal 0.11 percent in November.
Prices in the largest apartments dropped by around a nominal 2.3 percent in November, while the smallest apartments saw values sink by 0.10 percent.
The firm’s research covers “about seven citywide indices and a total of 19 district and project-based indices” to provide accurate sampling of the Dubai housing market.
Earlier this month, several real estate agencies warned that prices could keep on falling for another two years.
Landmark Advisory warned that residential values may fall by as much as 20 percent more by the end of 2012 if the planned pipeline of new homes are brought online.
In general, the outlook for Dubai in 2011 will remain mixed, experts say.
Jonathan Fothergill, director of UAE valuations at Cluttons, said that while prices would continue to decline next year, this would happen at a much slower rate, and that a key factor would be those properties that are well located and well maintained.
“Rates of high-end or prime units, such as the Palm Jumeirah villas…still hold value and there won’t be much drop for these properties,” he told Arabian Business.
“But the rate of decline for properties that are not well located or have poor finishes will be much higher – for example, International City cluster units, some Silicon City Oasis units, and those Jumeirah Lakes Towers and Dubai Marina units with a poor finish.”
A senior consultant at Colliers International said that the Dubai areas that would be least affected would be those projects where mortgage finance is available.
The villas sectors continues to be the best performer,” said the agency’s Saadallah Al Abed. “The high level of demand for this segments, compared to apartments, is encouraging banks or financial institutions to offer more mortgage finance on this segment, increasing demand even further.”
“Generally, projects developed by Emaar Properties are seeing the greatest interest as they are perceived to be of a better value and higher quality. In addition we see good interest in the Palm Jumeirah area,” Al Abed added.
I am not sure why developers continue to produce units that do nothing but depress the market further and reducing the chances of the industry recovering. This is not doing them any good nor the economy.