Decline in apartment sales was most prominent in Dubai International Financial Centre, Discovery Gardens and Dubai Sports City, says report
Average villa and apartment sales prices fell by 4 percent during the second quarter of 2018, with an annual drop of 11 percent, according to Asteco.
Its Dubai Real Estate Report Q2 2018 said the decline in apartment sales was most prominent in Dubai International Financial Centre (DIFC), Discovery Gardens and Dubai Sports City - registering a 6 percent fall since Q1.
The highest quarterly drops in villa sales prices were observed in Jumeirah Park (8 percent), Arabian Ranches (5 percent) and The Springs (5 percent), Asteco said.
It added that sales activity remained steady, despite an overall bearish outlook from investors and end users.
Asteco attributed the stable trend to further project launches, often with increasingly attractive incentives, competitive rates and extended payment terms.
John Stevens, managing director of Asteco, said: “Generally, new developments focused on the affordable segment, resulting in a marginally more noticeable quarterly drop in sales prices at 5 percent, compared to 3 percent for mid- and high-end properties.”
He said despite a lower number of anticipated handovers, the volume of new supply remained significant. This contributed to an overall quarterly decrease in apartment and villa rental rates of 3 percent and 2 percent, while annual declines were more prominent at 12 percent and 10 percent respectively.
Stevens added: “Vacancy levels across multiple projects rose due to the supply of additional inventory. Properties with proactive management and maintenance teams succeeded in maintaining steady occupancy rates, while landlords offering discounts and additional incentives also achieved solid tenant retention. Over the next quarter, we expect further gradual but consistent softening in rental rates for all asset classes.”
Compared to 2017, the highest apartment rental rate drops were recorded in Jumeirah Village (16 percent), followed by Jumeirah Beach Residence (JBR) with 15 percent, and Jumeirah Lakes Towers, Deira and Discovery Gardens with 14 percent each.
As for villa rental rates, Jumeirah Park and Jumeirah Village showed the most pronounced annual decrease at 15 percent, followed by Arabian Ranches with 11%.
Asteco said approximately 3,400 residential units were handed over in Q2, closely matching the first quarter with the majority of new supply located along the new growth corridors of Sheikh Mohammed Bin Zayed Road (E311) and Emirates Road (E611).
An estimated total of 25,000 additional units is slated for delivery by end-2018.
Asteco aid it has revised its 2018 supply projections for both residential units and office space downwards by 17 percent and 20 percent respectively, based on a combination of factors including lower handover volumes in the first half of the year and anticipated project delays.