Dubai property values dipped by 2.5% in Q4 2019, says study

ValuStrat Price Index said Dubai residential capital values dipped by 2.5%

Dubai's property values continue to decrease
Dubai's property values continue to decrease

Dubai residential capital values dipped by 2.5% and office capital values weakened by 1.9% in Q4 2019, a new report has found.

Residential capital value depreciation across Dubai in Q4 2019 ranged from 1.5 to 3.5%, said research from the ValuStrat Price Index (VPI), a valuation-based index that tracks change in capital values for a representative fixed basket of properties.

On an annual basis, four out of 26 locations witnessed single-digit declines, including villas in the Meadows, Palm Jumeirah and Emirates Hills, as well as apartments in Dubai Sports City.

Capital values dropped more than 15 percent annually for apartments in Discovery Gardens and Dubai Production City.

“An evident positive buyer sentiment has been observed for the past 15 months, boosting investor demand, this was likely due to attractive prices, fewer off-plan launches and delayed project completions. Annually, cash sale volumes of ready homes grew 29.7 percent and off-plan sales jumped 68.3 percent…” said Haider Tuaima, head of real estate research at ValuStrat.

The Dubai VPI for residential rental values stood at 70.8 points, declining 3.8% quarterly and 9.1% annually.

The average residential annual rent in Dubai was $24,000 (AED 87,961) – with apartments at $18,400 (AED 67,944) and villas at $57,400 (AED 210,918).

Dubai’s residential net yields averaged 6%, with apartments at 6.2% and villas at 4.9%. Residential occupancy in Dubai was estimated at 86%, ValuStrat said.

A total of 24,613 residential units were completed during 2019, including 19,505 apartments and 5,108 villas/townhouses, the research firm said.
More than half of 2019’s new supply was concentrated in four areas: Dubailand, Jumeirah Village Circle, Dubai Marina and Mohammed Bin Rashid City.

Developers promising to handover 340 projects totalling 90,000 units in 2020 remains to be realised, the report said.

Declan King MRICS – MD and group head real estate, ValuStrat, said: “While we are not yet predicting price recovery, it is really interesting to see that more and more buyers are entering the residential market – perhaps an indication that many feel much reduced sales prices represent good value, and that it is now about the right time to buy.

"Lowered borrowing costs, improved product offerings and attractive developer payment plans may all now be creating the right conditions for improved buyer confidence in Dubai’s property market.”

Office dips

At 1.9%, the VPI for Dubai’s office capital registered the lowest quarterly decline since Q4 2017.

Office space in Jumeirah Lake Towers witnessed the highest annual drop of 19.3% and 3.2% quarterly, this was followed by Barsha Heights (TECOM) with declines of 13.7% annually and 2.2% quarterly.

Dubai International Financial Centre (DIFC) demonstrated relative resilience to the overall citywide downward trend, as capital values softened annually by 7.3% with no change since Q3 2019.

Construction of an estimated 238,871 sq m (2.57 million sq ft) GLA of office space was completed in 2019. Available data on remaining office space under construction is estimated at 357,271 sq m (3.8 million sq ft) GLA, expected for delivery in 2020.

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