Dubai property declines pick up speed as more units come into market

Dubai: Property prices in Dubai started falling at a faster pace towards the end of the year, most likely brought on by the sheer volume of new homes being delivered. Much the same was being felt in the residential rental space as well, according to the latest Knight Frank report.

The report estimates that in the three months up to November, values were down 4 per cent. Taken over a 12-month timeframe, the rate of decline is pegged at 4.1 per cent.

On rentals, the three-month period saw a 3.9 per cent dip, while from a year-on-year perspective, the decline was 8.6 per cent.

“While demand had eased in 2018, price falls are more due to the considerable level of supply delivered in 2018 and that which is expected to be delivered in 2019,” the report notes.

Of the initial 32,727 units forecast to be delivered last year, Knight Frank reckons 22,476 units reached the finish line.

But that’s still considerable given that in each of the previous three years, the tally was well under 15,000 homes or so.

“This increase in supply, in addition to the unabsorbed supply from previous years has led to the extended pressure on prices and rents which we are witnessing, this trend is expected to continue throughout 2019.”

What of buying activity? The first two quarters of 2018 proved quite burdensome, but since then the decline in transactions has moderated with deal flows falling 3 per cent year-on-year to November 2018.

In Abu Dhabi, average sale prices were down 4.7 per cent in the year to November, with those on apartments falling 4.4 per cent while those for villas or town houses declining by 4.9 per cent.

The biggest declines were for apartments on Al Reem Island, which fell 5.7 per cent, and on Saadiyat Island and Al Reef villa areas, where prices are down 5.6 per cent apiece.

Rents across Abu Dhabi recorded an 8.7 per cent drop in the year to November.