Residential sales and rental prices in the UAE have continued to fall between April and October, enticing renters to consider buying properties, according to a new report from UAE-based property search website Propertyfinder.ae.
“Falling prices, as we’ve seen, makes buying more feasible for a larger percentage of the population,” said Michael Lahyani, chief executive of Propertyfinder Group.
“We’re seeing the ‘forever renters’ moving into the buyer category, preferring to pay off their own mortgage rather than someone else’s.”
Residential real estate prices and rents in the UAE have started sliding in the past two years due to the economic slowdown, jobs cuts and lower housing allowances amid an increase in supply in some communities.
The steepest drop in rental prices during the April-October period was in Dubai villas, with declines in Al Furjan neighbourhood (13.9 per cent), followed by Al Barsha (12 per cent), Jumeirah Village Circle (JVC), at 11.8 per cent, and Dubai Sports City (10.7 per cent).
"Dubai villa rents have experienced the biggest decline of all the categories in this report, but the decline is shallowing for other categories when compared to January 2016," the report said. "This may be due to a significant amount of affordable villas released to the market in areas such as JVC and Al Furjan."
Almost all of Dubai apartment communities monitored in the website’s 2017 Trends study saw rental declines, attributed to high levels of new stock. The exception was Dubai Investment Park, which saw an increase of 3.5 per cent, according to the report.
The biggest apartment rental drop was in Discovery Gardens (9.3 per cent). Historically one of the most affordable developments in Dubai, this neighbourhood now faces increasing competition from new “affordable” projects across Dubai.
Meanwhile, Dubai sales prices have seen low single-digit declines in most areas of the emirate in the six-month period. The biggest drop for Dubai apartments was in The Views (5.2 per cent), while Dubai Marina saw a more modest 2.4 per cent decline.
The up-and-coming area of Business Bay bucked the trend with a 0.5 per cent increase in sales prices over the period, possibly boosted by recent development activity alongside the new Dubai Canal.
Dubai villa sales prices also experienced significant declines, according to the report, with The Meadows prices dropping by 9.3 per cent, Dubai Land by 8.2 per cent, Al Furjan by 8.1 per cent and Jumeirah Islands by 7.1 per cent.
Villa sales prices in the upscale Emirates Hills and Jumeirah Park neighbourhoods remained stable, while the midmarket areas of JVC and Al Barsha were the only two Dubai villa communities that saw sales increases in the past six months, of 4 per cent and 0.69 per cent respectively.
The Abu Dhabi villa rental market has seen a rapid decline from relatively stable levels in 2016 because of a larger number of handovers, according to Propertyfinder.ae.
Villa rental prices declined by 12 per cent in Al Salam Street, 7.7 per cent in Al Reef and 5.9 per cent in Al Raha Gardens. On the apartment front, the report shows a mixed picture, with Mohamed Bin Zayed City, Al Mushrif and Electra Street all seeing large rental increases of 13.8 per cent, 12.8 per cent and 8 per cent, respectively.
However, rents dropped in other Abu Dhabi communities, with the steepest declines recorded in the Corniche Area (7.8 per cent), Al Ghadeer (7.7 per cent), Al Raha Beach (6.6 per cent, and Al Reem Island (5 per cent).
Abu Dhabi villa sales prices witnessed low-to-mid single-digit declines over the six-month period with the biggest drops seen in Al Reef (6.6 per cent) and Al Raha Golf Gardens (6.2 per cent).