Rent and sales prices continued to drop across most parts of Dubai in the third quarter of 2019, according to a new report from Cushman & Wakefield Core.
According to the report, sales prices over the last 12 months witnessed the sharpest drops in villas in Jumeirah Village (13 percent), apartments in Dubai Land (19 percent), Discovery Gardens (15 percent) and Dubai Sports City (15 percent).
Apartments in Palm Jumeirah, Jumeirah Village and Business Bay, however, saw an uptick in average sales prices as newly developed projects in those areas are in higher price ranges, thus elevate the average prices. The report notes that older stock in those same areas continues to show subdued performance.
“The positive offset of the ongoing softening of the sales market is that it is definitely a buyers’ market with both individual property owners and developers being flexible and in line with market conditions,” said Prathyusha Gurrapu, head of research and advisory at Cushman & Wakefield Core.
“The secondary sales market, mainly the mortgage market, has seen an uptick over the last three years, reflecting that the sales market is increasingly being driven by end-users.”
The report forecasts that almost 29,500 units will be delivered by the end of 2019, with approximately 16,500 already delivered year to date, primarily in Dubai Land, Jumeirah Village Circle and Triangle, Meydan, MBR City, Dubai Creek Harbour and Dubai South.
“With existing inventory and future stock brought to the market over 2019-2020, sales prices are forecast to remain under pressure in the foreseeable future as the market gradually adjusts to supply and demand dynamics on the back of ongoing reforms,” Gurrapu added.
Rental market
The report also noted that certain areas saw notable rental declines - particularly Discovery Gardens (13 percent) and Dubai Land (12 percent) as competition intensified in the affordable market segment and more options become available.
On the other hand, centrally located districts such as Business Bay, Dubai Marina and DIFC saw low rental falls when compared to outer areas.
“We expect rental prices to remain under pressure in 2019/2020 and the rental market to continue being tenant friendly with many tenants looking to move by upgrading to bigger units within new projects or similar or lower rents,” Gurrapu said.
“Those choosing to stay are negotiating various incentives such as rent-free periods, longer contract terms, multiple cheques, refurbishment of units and contribution to utilities as tenant retention becomes increasingly challenging for landlords,” she added.
