Villa sales in Dubai recorded a bit of a spike during the fourth quarter, suggesting that worst affected residential format could be up for a more sustained turnaround. Villa specific transactions were up 22 per cent in the final three months of 2016, according to ValuStrat data, while apartments gained 35 per cent.
“Transacted sale prices were 4.2 per cent higher than in the second quarter,” said Haider Tuaima, Research Manager.
But yields on residential yields in Dubai continue to be under pressure — They “compressed by 0.1 per cent, as median asking rents were 6.5 per cent lower than Q4-15,” Tuaima added. “But on a quarter-on-quarter basis, they remained broadly flat.”
Based on ValuStrat data, the highest net yields were registered in mid-affordable locations of 6.3 per cent to 6.9.
According to the consultancy, Dubai saw 11,000 units were delivered last year — the second study that has come out this week talking about a plus 10,000 supply during the year. This equates to “33 per cent of the initial estimate at the start of the year”.
As for this year, the pipeline is expected to churn out 75 per cent of projected residential supply, especially in the mid-tier locations of Silicon Oasis, Dubailand, Jumeirah Village Circle, Al Quoz, Dubai Sports City, International City, Production City (formerly IMPZ) and Al Furjan. Thirteen off-plan residential projects were launched in Q4-16, adding more than 2,800 units to the residential pipeline by 2020.
Meanwhile, among prime locations in the city, Downtown Dubai apartment prices continue to show signs of heading back from their lows. They recovered 3 per cent of their value last year. Some potential buyers of ready properties seemed hesitant in closing sales last year, anticipating further drops in prices this year,” said Tuaima. “Not surprisingly, other buyers preferred to go the off-plan route, with a choice of several Emaar projects currently under construction in the area.”
Transactions on ready properties at the Downtown were down 11 per cent annually to 444 units totalling Dh1.04 billion, which is 24.6 per cent lower than in 2015. Asking rents have declined between 3-10 per cent since 2015, with studios averaging Dh78,000 and one-bedroom units at Dh120,000, down from Dh81,000 and Dh125,000, respectively.
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