Asteco Reports Decrease in Rental Rates and Sales Prices across Dubai

Monday 23 April 2018
Dubai - MENA Herald:

Asteco’s Dubai Real Estate Report Q1 2018 has recorded an annual decline in villa and apartment sales of 6% and 9% respectively, with large villas at high price points generating limited interest, mainly due to the lower investment yields associated with this type of product.

Affordable housing options remain at the forefront of buyers’ interest, with many banks and developers stipulating a minimum monthly salary of AED15,000 in order to purchase property in the emirate.

John Stevens, Managing Director of Asteco, said: “We have seen a moderate increase in enquiries and transactions for high-end residential units, suggesting that albeit at a conservative level, there is still appetite for such accommodation.”

The annual rental decline, for both apartments and villas, has averaged approximately 10%, whilst incentives such as multiple cheques, rent-free periods, and the absorption of utility, maintenance and/or agent fees have become the norm.

Some of Dubai’s popular communities have witnessed the sharpest decline in rents. These included Jumeirah Beach Residence recording a 15% drop since 2017, while Downtown Dubai, Dubai Marina and Deira come in a close second with a 14% decrease. Other areas that have demonstrated a significant decline in rents are: Palm Jumeirah, Business Bay, Greens and Dubai Sports City among others.   

Villa rentals in Jumeirah Village and Jumeirah Park have seen a decrease of 15% and 13% respectively, while Arabian Ranches, Palm Jumeirah and Springs are also proving cheaper to rent compared to 2017 rates.

Stevens added: “While on the whole, the residential sector has witnessed only a minimal decline of 1% quarter-on-quarter, it is important to note that newly handed-over, lower-end buildings in areas with significant supply potential have struggled with occupancy, particularly where rates and incentives were not aligned with the market.”

Approximately 3,625 residential units were handed over in Q1 2018, with a total of 30,000 potentially to be delivered by Q4 2018. Most of the recent inventory is located in the new investment areas along the Sheikh Mohammed Bin Zayed Road (E311) and Emirates Road (E611) corridors. Among the established communities, Dubai Marina also recorded additional supply with the completion of the first of three residential towers at The Residences at Marina Gate.

Meanwhile, new additions to the office market included The Exchange at Dubai International Financial Centre (DIFC) and one building within the One Central project in the neighbouring Central Business District. This marks an important development for Grade A offices that were previously undersupplied.

Q1 2018 also saw the launch of several new residential projects, including The Grand by Emaar at Dubai Creek Harbour and Reva Residences by Damac at Business Bay.

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