According to a recent report on the real estate sector in
Dubai, residential and commercial transaction volume witnessed a fourth-quarter increase — the
first of 2015.
The report, conducted by leading local consulting firm ValuStrat, focused on the fourth quarter of 2015.
“ValuStrat Q4 report’s major findings include an
increase in residential and commercial transaction volume for the first time in
2015,” Haider Tuaima, research manager at ValuStrat, told Gulf News
Journal. “The report also found the prime retail sector continued its
strong performance along with the hospitality sector with regionally high
occupancy rates of 80 percent for Q4, although with lower average daily rates
due to continued new supply of an estimated 7,700 keys in 2015.”
The report found that approximately 50 percent of residential supply delayed
during the period, with a 6.4 percent decline in residential values as per the
ValuStrat Price Index — a comparison of values for a fixed basket of properties
in 26 freehold locations measured over time.
Compared to the same period in 2014, the fourth quarter of
2015 saw residential rents in Dubai drop between three and five percent.
“The asking rents declined slightly due to seasonal
factors, after the summer holidays, as well as due to new units being handed
over, particularly in prime areas,” Tuaima said. “This was also
reflected in the recent RERA index update.”
The residential construction sector faced a more-than-expected slowdown. ValuStrat continued to monitor the progress of construction
projects citywide and found that although some projects were handed over before
their due dates, many others faced delays.
“By December 2015, ValuStrat research compared
databases of all projects and found that around 15,000 residential units have
been delayed, representing almost half of the total estimated at the beginning
of 2015,” Tuaima said.
The ValuStrat Price Index statistical analysis, which is
based on a representative sample of properties, is
compared and carefully weighed over monthly periods. The analysis found that a volatile 14 months starting in January 2014 was followed by extreme monthly
growth rates of 4.1 percent, with a drop to 2.7 percent by March 2015. The value
declines started to decelerate from one percent before reaching zero percent in October and
November. December values saw just a 0.1 percent dip, registering no
significant change.
“By analyzing value patterns over time for the whole
sample, and assuming similar economic conditions, we could conclude that
there’s a high probability that this year may see a plateau in prices as we
have already witnessed during the last few months,” Tuaima said.
Basing on the findings of this report, Tuaima said 2016 is
likely to see a stable residential market.
“With the continued safe haven status that Dubai
enjoys, we expect a rise in inquiries for ready properties in prime areas,
anticipating capital appreciation and higher rental yields in mid-affordable
areas,” he said. “We are also likely to see competitive payment
plans from developers, increased transaction volumes, marginally softened
residential rents, continued growth in the prime retail sector and increased
interest for sub-prime office space.”
