Dubai: Dubai residents are getting extremely choosy about where they want to move into. It doesn’t matter whether a building has just been delivered, if the landlord’s offered rents do not match market rates, the homes are likely to remain empty.
Even “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,” said John Stevens, managing director of Asteco, the property services firm.
The high-rise Jumeirah Beach Residences neighbourhood has recorded the highest drop since early 2017, by 15 per cent, while Asteco estimates those at the Downtown and Dubai Marina to be down 14 per cent. Even the non-freehold residential hotspots in Deira took a 14 per cent hit over the period. Other areas with “significant decline” are Palm Jumeirah, Business Bay, Greens and Dubai Sports City.
An estimated 30,000 new homes (21,500 of these being apartments) are in line for delivery this year, according to Asteco, which is broadly in line with what other consultancies have forecast.
But developers will need to get a move on if those numbers are to be met through the rest of the year. Only 3,650 units got delivered in the first three months. In 2017, 13,900 apartments and 3,600 villas made it past the finish line.
“Whilst the majority of the recent inventory is located in the new investment areas along the Shaikh Mohammad Bin Zayed Road (E311) and Emirates Road (E611) corridors, communities such as Dubai Marina also recorded additional stock in the form of The Residences at Marina Gate with the completion of the first out of three residential towers,” the report says.
On the sales side, the rate of decline in property values did slow down in the first quarter of 2018. Asteco suggests that on average apartment and villa sales prices “softened by around 1 per cent”.
“The annual decline for villas (minus 6 per cent) was less pronounced than for apartments (minus 9 per cent),” the report notes.
“It should be noted that particularly large villas with high price points generated limited interest, mainly due to the lower investment yields attached to this type of unit.”