Dubai: The Meydan and adjoining MBR City developments will account for a significant bulk — 19 per cent — of the 13,000 new homes that will be delivered in Dubai between now and end of the year. In the first three quarters, around 16,000 were completed, according to the latest update from Core, the property consultancy.
That is in line with most of the projections being made these days, which place full-year delivery tally at around or just over the 30,000 unit mark. Core believes Business Bay will represent about 15 per cent of the upcoming deliveries in the fourth quarter, and Dubai Silicon Oasis about 10 per cent.
Of the 16,000 homes in the year to September, the Meydan and MBR City made up 4 per cent, but across the master-developments, several projects are at advanced stages.
Impact on property values
Can the fresh supply keep property values in a tight bad? Or force them to drop further? According to the Core summary, the impact is varying by the location. But “Interestingly, apartments in Palm Jumeirah, Jumeirah Village and Business Bay saw an uptick in average sales prices as newly developed projects in these areas are in the higher price range.”
This raised the “area average while the older stock continues to show a subdued performance.”
Areas that saw a drop by the widest margin were “villas in Jumeirah Village (by 13 per cent) and apartments in Dubailand (19 per cent), Discovery Gardens (15 per cent) and Dubai Sports City (15 per cent) in the last 12 months.”
“The positive offset of the ongoing softening is that it is definitely a buyers’ market with both individual property owners and developers being flexible and in line with market conditions,” the report notes. “The secondary sales market, mainly the mortgage market, has seen an uptick over the last three years, reflecting that the sales market is increasing.”
Rents under stress
The weakest performing apartment locations — in terms of rental reductions — were Discovery Gardens (dropping 13 per cent), and Dubailand (12 per cent), as more mid-market projects are completed.
“On the other hand, centrally located districts such as Business Bay, Dubai Marina, and DIFC have observed relatively lower levels of rental falls when compared to outer areas,” Core reports. “We expect rental prices to remain under pressure in 2019-20 and the rental market to continue being tenant-friendly.”