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Dubai residential market sees no quarterly decline

2016 may witness a plateau in prices, indicating a buyer’s market in anticipation of higher rental yields for mid-affordable properties

The residential market in Dubai registered no effective quarterly decline.
The residential market in Dubai registered no effective quarterly decline.

The residential market in Dubai registered no effective quarterly decline for the first time since the current period of correction following the March 2014 peak, according to a recent report.

According to the Q4 2015 real estate report issued by local consulting firm ValuStrat, 2016 may witness a plateau in prices, indicating a buyer’s market in anticipation of higher rental yields for mid-affordable properties, and increased interest in prime properties in a search for capital appreciation.

A comparison of values for a fixed basket of properties in 26 freehold locations measured over time, has given the ValuStrat Price Index (VPI) the ability to compare like with like, factoring in property specifications, such as quality, views, amenities and age.

The Q4 VPI has shown a 6.4% decline of values year-on-year. However the quarterly rate of decline has shown no significant change in values. October and November’s residential VPI both registered 98.0 points, while December saw a marginal decline of 0.1% to 97.9 points.

More cash investors are seeking projects by well reputed developers particularly for ready properties. Dubai apartment and villa markets saw values marginally decline by 0.1% and 0.4% quarter-on-quarter respectively.

ValuStrat estimates the total completed residential supply during 2015 stood at 14,000 apartments and 3,400 villas.

Seven off-plan residential projects were launched in Q4 to add more than 1,500 units to the residential pipeline by 2018.

“Around half of the residential projects originally scheduled for completion in 2015 are delayed and have been rescheduled for handover during 2016 and 2017, reflecting a continued construction sector slowdown," said Haider Tuaima, ValuStrat research manager.

Office transaction prices fell by 13% since last year and 4.6% since the third quarter. However, asking sales prices during Q4 were 15.4% higher than two years ago. 

The estimated total number of hotel rooms and hotel apartments in 2015 stood at more than 100,000. Six hotels with 2,138 hospitality units were added in Q4, five of which are five-star and one four-star. Eleven new hotels were announced adding 4,251 keys to the pipeline over the next three years.

The average occupancy rate in Q4 was 80%.October and November saw occupancy rates of 80% and 83% respectively.

 

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