Cluttons says new legislation to balance real estate market is 'extremely positive'
New legislation which aims to see more affordable homes built in Dubai is a "watershed moment" for the emirate, according to real estate consultancy Cluttons.
It said the move will help Dubai avoid some of the lessons learned by more developed cities around the world, especially with regards to curtailing the emergence of poorly connected, low income neighbourhoods that are segregated from the rest of the city.
Dubai government recently announced plans to legislate, through planning, the provision of affordable homes in some of Dubai’s core locations.
Cluttons also said recent geopolitical developments on the regional front are likely to impact the emirate’s property market as investors seek an investment safe haven.
Faisal Durrani, head of research at Cluttons said: “Overall market conditions in the emirate have been relatively healthy. Going forward, we see regional developments and local legislation playing a big part in Dubai’s property market. We believe that Dubai Government’s initiative to focus on affordable housing is extremely positive and is a watershed moment for the emirate.
“While exact details around the legislation are yet to be confirmed, we expect to see a balanced approach between the presumed establishment of quotas around the provision of affordable housing that is both built-to-rent and built-to-sell, so that both aspiring buyers and tenants, priced out of city centre locations, can benefit.”
Cluttons said residential prices slipped by 1.9 percent in the three months to the end of September, following on from the 1.5 percent drop in Q2. The annual drop at the end of Q3 stood at 5.6 percent.
Villa values experienced their weakest performance in almost two years, with prices falling by 2.8 percent in the three months to the end of September. Apartment values saw a drop of 1.3 percent on average, with no submarket registering growth during Q3.
Transaction volumes remained relatively stable, with the number of deals during the first nine months of the year standing 4.6 percent higher than the same period last year. The volume of villa transactions however slipped by 1.6 percent over the same period.
According to Cluttons, the supply pipeline continued to strengthen, with nearly 30,000 units announced during the three days of Cityscape Global in September.
Durrani added: “Overall, we expect 79,738 units in total to be completed over the next three years. The corresponding growth in population, which usually averages 5 percent per year, should see a further 441,000 new people added to the city.
"While it may appear that supply and demand are well matched, particularly as 30-40 percent of the announced supply is likely to be delayed, or rephased, as has been the case historically, our concern remains centred on the fact that the vast majority of planned supply is designed to cater to the high-earning segment of the population.”