Deflationary pressure on Dubai residential rents increased during the first quarter of 2016, with average values falling by about two percent, according to a new report.
CBRE's Q1 2016 Dubai MarketView report said residential properties faced sliding rates across virtually all locations during Q1, reflecting the negative impact of new supply on the market and slowing new job growth caused by ongoing economic challenges in the region.
The report also said that residential sales prices also continued to drop during the quarter, with average two percent declines registered across the emirate, following a four percent slump in the previous quarter.
Mat Green, head of Research & Consulting, CBRE Middle East, said: “As has been the trend in recent quarters, prime locations have experienced some of the most pronounced declines, with Downtown Dubai in particular witnessing a notable dip in rentals during Q1.
"However, we have also seen deflationary pressures creeping into some of the more affordable leasehold locations, including Al Barsha, Oud Metha and Bur Dubai, whist freehold sub-markets such as International City have also suffered more market downturns in performance,” said Green.
He said the declines "broadly reflects current sentiment, with weaker investor demand, US dollar strength, and sustained economic challenges regionally and globally, combining to create an uncertain transactional market environment".
According to data from the Dubai Land Department, total real estate transactions were recorded at around $15 billion during the first quarter of 2016, delivered through 12,568 transactions.
This comprised 8,440 sales transactions with a value of $5.8 billion, with mortgages accounting for 3,213 transactions with a total value of $6.7 billion.
Dubai Marina was again the most prolific sub-market for sales, followed by Burj Khalifa and Business Bay. In terms of mortgages transactions, Dubai Marina was again first, followed by Muaisem 1 and Business Bay.
CBRE added that based on recent construction updates, close to 15,000 new residential units could complete during the course of 2016, with the majority of these properties from secondary locations such as Dubailand, Dubai Silicon Oasis and Jumeirah Village.
In terms of new supply from the more established sub-markets, Dubai Marina is likely to see the highest allocation, with around 8 percent of the total new units.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.
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