Residential property prices in Dubai are continuing to fall, although there is now a widening gap between villa and apartment values, according to Cluttons.
The property consultancy’s first-quarter 2011 reports said that while high-end villa areas such as Arabian Ranches, the Meadows and the Palm Jumeirah had seen “little to no movement” in price terms during the period, locations like Victory Heights and Motor City had seen drops of 3.6 percent, quarter-on-quarter.
However, Cluttons added that oversupply had affected apartment values, with prices in areas such as Discovery Gardens and International City dropping by 8.9 percent.
Areas in more high-end locations, such as Dubai Marina, Old Town and the Palm Jumeirah, saw drops of 3.7 percent during the same period, highlighting a “flight to quality”.
On the rental side, the agency said that apartment leases dropped by between 8 and 10 percent.
“Villa prices and rentals are expected to fall in some areas due to the ever-increasing supply of notable new freehold units in developments such as The Villa, Falcon City, Sports City and Jumeirah Village,” the report stated.
Cluttons said that the new developments’ lack of local infrastructure was contributing to lower demand, in turn lowering values and putting pressure on prices in other areas.
More positively, the consultancy pointed towards the improved financing conditions in the emirate, with mortgage rates now available for as little as 4.99 percent.
Last week, a local analyst warned that Dubai property values could still drop by up to 30 percent, hurt by oversupply and recent project cancellations.
“House prices in Dubai are likely going to slide downwards for the next two years as oversupply continues to build,” Rasmala Investments senior real estate analyst Saud Masud told Arabian Business.
“I would put that number at around 25-30 percent downside on current levels. This may add to downward revision risk pertaining to rents from mall tenancy to residential occupancy.”For all the latest business 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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