Dubai: Want to buy a villa without having to spend too much? Or as much as it would have cost to buy one in mid-2014?
Dubai’s residential clusters such as Jumeirah Village, Arabian Ranches and Green Community now of-fer a price point many investors/end users would be comfortable with, according to new data re-leased by Core UAE, the property services firm.
In fact, they will do well to look at Jumeirah Village, where values are down 17 per cent year-on-year as of the end of mid third quarter of 2016. Compared with the first quarter, home values there slipped 5 per cent in the subsequent three-month period, Core UAE data show.
And villas in Arabian Ranches, Green Community and Dubailand have seen prices hold at subdued levels, another reason why price-conscious buyers should start looking around now … if they haven’t done so already.
One way developers seem to be fighting back to stem any further price erosion is to control the near to medium term supply. According to Core, a staggering 40 per cent of promised supply from 2011 onward is yet to be handed over to their owners.
But individual landlords are seeing the writing on the wall when it comes to market dynamics and not asking for too much. Another reason why end users could be getting comfortable in getting into the market now.
“Landlords who wish to sell in this bottoming market are keeping realistic reserve prices, thus bridging the gap and pushing transaction volumes up,” said David Godchaux, CEO of Core UAE. “The growing pool of investors and end users who have been waiting on the sidelines for the last few quarters for sales prices to find their new floor are slowly going ahead with their buying instructions.
“The prices have hit a plateau across most of Dubai’s submarkets and are showing resistance to further drops.”
Some of which is being sighted in the second quarter transactions. Second quarter deals were up 5 per cent over The first quarter of 2016 (but 15 per cent down compared with second quarter 2015 numbers.) Even then a quarter-on-quarter upturn is something that the market and its stakeholders will welcome. After a drop for seven consecutive quarters, Dubai’s overall sales market witnessed a 1 per cent quarter-on-quarter rise in sales prices in the second quarter of 2016.
There were buyers picking up units making full use of the soft conditions. The Springs and The Meadows “demonstrated a recovery with a 3 per cent quarter-on-quarter increase from an overall 7 per cent year-on-year drop, making it the highest performing villa district in Dubai,” the Core report states.
At the top-end of the market, Emirates Hills and Palm Jumeirah deal-making remained steady.
“A decisive revival in the overall market is too soon to predict as we expect the remainder of the third to actually bring in the delayed traditional ‘summer sluggishness’ in activity levels,” said Godchaux.
“Nonetheless, we expect transactions to gather momentum again throughout Fourth quarter 2016 and into 2017, providing there are no external shocks affecting the market sentiment.”
Rental slow down remains extremely selective in Dubai freehold
As with buying them, it could be a good time to rent a villa as well.
This property type has seen a “sharper drop in rents despite stable sales prices in their respective markets,” says the new report from Core UAE. “This drift may be due to the current subdued rental activity as new jobs — and thus need for new leases and renewals — have historically been fewer during summer while sales activity defied historic trends by picking up pace over Q2-16, owing to renewed interest by the bottoming sales prices.
“We expect this opposing behaviour of both the rental and sales markets to be only in the interim and foresee the rents to go back to echoing the sales prices … albeit with a lag.”
At Emirates Hills and Palm Jumeirah, the rental drop has been an “insignificant” 2 per cent quarterly drop. This was a consequence of limited rental-specific transactions taking place in these locations.
Dubailand villas saw rents lower by 3 per cent quarter-on-quarter “due to better lease terms offered by other central villa districts”, the report adds.
