New Asteco report says the Dubai market has seen a substantial delay in project handovers, mainly resulting from overly ambitious schedules
Dubai villa and apartment rental rates maintained a downward trajectory during the third quarter of 2018, reflecting a trend observed over the past quarters, a new report by Asteco has revealed.
Rents decreased by 3 percent and 2 percent respectively since Q2 while the decline of residential sales prices has been more pronounced at 4 percent, its UAE Real Estate Report Q3 2018 said.
It added that following a period of relative stability, office rental rates decreased 5 percent over the last three months as a result of new supply and limited, if not negative, business and employment growth.
Neighbourhoods with high handover volumes, both within the city as well as across surrounding developments, recorded the sharpest rental rate downturn and a significant rise in tenant turnover, the report noted.
Asteco added that the Dubai market has seen a substantial delay in project handovers, mainly resulting from project delays and overly ambitious handover schedules.
Therefore, a sizeable number of units previously forecasted for completion in H2, will only be ready in 2019.
John Stevens, managing director of Asteco, said: “Rental rates across all asset classes are expected to come under further pressure this year, and this trend is likely to spill over into early 2019.”
In Abu Dhabi, apartment sales prices witnessed a marginal decline of 1 percent during Q3, mainly due to the limited demand for completed units available within the secondary market, translating into low transactional volumes. However, off-plan and newly completed properties fared better and continued to generate interest.
Apartment rental rates fell by an average of 3 percent since Q2, with the highest drop reported for mid- and lower-end properties while villa rental rates followed a similar trend with a quarterly decrease of 1 percent.
Stevens said: “Residential rents continued to soften over the third quarter due to new supply and reduced levels of demand, largely attributed to a bearish business outlook. These conditions led to an increase in vacancies, particularly in buildings with lower-quality specifications.”