'Prime' villa sales on Palm Jumeirah drop 44% YOY
'Prime' villas worth more than $2.7m (AED10m) decreased 44% year-on-year, according to the latest report from Core, UAE Associate Savills
Sales of villas on the Palm Jumeirah have fallen 25% over the last 12 months, according to the latest report from Core, UAE Associate Savills.
According to the Q2 2016 Establish Prime Residential Markets in Dubai report, 'Prime' villas - worth more than $2.7m (AED10m) - decreased by 44% year-on-year.
Tough market conditions have also been felt in other prime areas of the Emirate, including Al Barari, Dubai Marina and Downtown, with Emirates Hills bucking the trend.
Sales prices per sq ft for villas on the Palm remain relatively steady with just a $4 year-on-year drop as landlords continue to command prices for well-maintained or refurbished properties.
The area's rental market witnessed a 7% year-on-year drop - resulting in a marginal fall in yield levels.
David Godchaux, CEO of Core, UAE Associate of Savills, said: "With a total stock of approximately 1,700 villas, an estimted 150-200 villas are currently available for sale on Palm Jumeirah.
"More units are anticipated to be held by investors as many are not pressed financially to sell in this bottoming market, while a few others look towards commanding premiums by refurbishing existing units and attracting buyers who are seeking contemporary products.
"A strong recovery in prices is not anticipated in the near term as we expect this underlying stock to keep the sales prices static even if the demand revives in the coming quarters."
In Dubai Marina, sales transaction levels fell 25%, while prime apartment sales fell 43%.
However, the area has still witness the highest transaction activity in the apartment segment over the last few years, Godchaux said.
"As expected, headline occupancy levels are nearly 90% in top performing towers and the prime rental market has remained relatively steady due to the continued demand from expats.
"Nonetheless, prime sale prices have dropped 8% year-on-year, although this has created investor opportunities through stable yields averaging between 5-6%"
Dubai's Emirates Hills witnessed the highest transaction volume among all prime villa districts in the last four quarters - at 40% of the city's market.
Villa propertives worth over $2.7m (AED10m) in the area experience approximately 45% higher year-on-year transactional activity levels during the same period.
Villa sales and rents in Emirates Hills have followed almost idential trends, keeping the yields between 3.5-3.7% over the last fours years.
Godchaux expects this prime submarket to hold value in the mid to long term in addition to maintaing its 'elite address' status.
Elsewhere, Al Barari saw a 10% year-on0year drop, while the volume of prime sales in Downtown fell by 12%.
However, Godchaux predicts more promising news for Downtown.
He said: "The district maintains its high headline occupancies, currently ranging over 85% across most of the prime towers.
"The Downtown rental market has in fact shown a 2% year-on-year increase, bucking apprehensions of a weakening rental demand due to a consolidating financial jobs market."
Overall the report reveals prime residential prices in Dubai are 60% below prime New York, 75% below prime London and a staggering 85% below prime Hong Kong.