By Staff writer
Sales prices and rent to decline further in H2, according to latest Chestertons report
Average annual rents in some areas of Dubai declined by almost 15 percent in Q2, with real estate firm Chestertons forecasting further drops in the second half of the year.
According to the latest ‘Observer: Dubai Residential Report Q2 2020’, average apartment rents across Motor City and The Views saw the highest average declines of 14.8 percent and 13.2 percent, respectively.
The Greens, Dubai Silicon Oasis, Dubai Sports City and Discovery Gardens all saw double-digit falls since Q2 2019, with rents for a one-bedroom unit falling to AED59,250, AED38,000, AED40,000, and AED45,000 per annum, respectively.
In terms of villas, the sharpest rental rate falls were witnessed across The Springs and The Meadows, as annual rents fell by 12.2 percent and 12.7 percent respectively, compared to Q2 2019, with a three-bedroom rent in The Meadows standing at AED165,000.
Jumeirah Islands, Palm Jumeirah and The Lakes saw the lowest annual declines in average rents, at 2.9 percent, 3.1 percent and five percent, with three-bedroom units available for AED138,000, AED250,000, and AED163,000, respectively.
Chris Hobden, head of strategic consultancy, Chestertons MENA, said: “Landlords will need to demonstrate flexibility on rents and payment terms over the second half of 2020, with tenants increasingly seeking shorter lease lengths and payment through four to six cheques becoming widely expected.”
Residential transactions totalled 5,233 units, valued at AED9.06 billion during Q2, representing a 40 percent fall year-on-year as the emirate struggled with the impact of preventative measures aimed at curbing the spread of coronavirus – this was evident during April and May, where total sales stood at 1,739 and 1,373 units, respectively.
Eased restrictions during June had a notable impact on sales volume, with monthly sales increasing to 2,121 units, indicating the first steps to a recovery in transaction levels.
The report revealed that developers refrained from launching new projects for sale over the second quarter, leaving total off-plan sales launches at 4,458 units for H1 2020, compared to 12,222 in H1 2019 and 21,435 in H1 2018.
In the sales market, average apartment prices fell 9.8 percent on an annual basis, while villa sales prices saw a fall of 7.1 percent.
Average prices at The Lakes stood at AED 980 per sq ft, down from AED1,038 in Q2 2019, with average prices at Arabian Ranches and Jumeirah Park standing at AED790 and AED720, respectively.
Annually, Jumeirah Park was the only area to see a double-digit fall in average prices, falling from AED827 per sqft in Q2 2019, a decline of 12.9 percent.
Hobden said: “While we expect residential prices and rents to decline further over the second half of 2020 - a result of challenging economic conditions and a declining expatriate population - there are positives to draw from Q2 that will support Dubai’s residential sector moving forward.”