The rate of decline in Dubai’s property prices is expected to stabilise this year before recovering in 2021, when the delivery of new units begins to slow down, according to a new report.
In the second half of 2019, the rate of decline in the emirate’s property prices slowed considerably as buyers began to take advantage of the value on offer in the market, according to the ‘Property Finder Trends’ report released on Wednesday. Although advertised prices continued to fall in most areas in the second half, the rate of decline slowed sharply as buyer appetite increased.
“Property launches have reduced considerably since last year and with a new committee in place to balance supply and demand, developers are more likely to focus on completing their existing projects,” the report said.
Asking prices of Dubai villas declined at a rate of 3.2 per cent, down from a rate of 4.3 per cent in the first half 2019. Apartments fared better in Dubai, with prices falling just 1.1 per cent, down from 3.9 per cent in the first six months of 2019, according to the report.
Communities that registered the biggest six-month asking price declines in the second half of 2019 for apartments were Barsha Heights with a 13.4 per cent slide and Jumeirah Lakes Towers with a 11.9 per cent decline. Prices at Damac Hills dropped 9.7 per cent, Discovery Gardens 7.7 per cent and Dubai Marina 7 per cent.
In the villa/townhouse market, communities that recorded the biggest six-month asking price declines were JVC with 8.7 per cent dip. Prices in Jumeirah Village Triangle and Motor City were down 4.6 per cent and 4.5 per cent respectively, the report found.
Asking rental prices continued to fall at a faster rate than sales prices in many places. Advertised rents for Dubai apartments fell by 2.4 per cent in the second half of 2019, the report said.
“Demand has not been able to keep up with handovers and landlords are having to be flexible to attract and retain tenants,” the report added.
The rent decline in apartments was pronounced in areas that recorded a high number of new unit deliveries such as Jumeirah Village Triangle (13.8 per cent), Town Square (10.8 per cent) and Dubai Sports City (10 per cent).
Advertised rents for villa/townhouse in Dubai also fell by 2.9 per cent, but at a slower rate in the second half of last year as more apartment tenants chose villa living. Villa communities that experienced the biggest rent decline were Motor City (11 per cent), Reem (4 per cent) and JVT (3.9 per cent).
Based on 176 projects that Property Finder analysed, verified and updated, at least 61,646 units are expected for 2020. There are 198 projects with 32,084 units that are scheduled to be completed by 2020, which the company said, still need to be verified.
“The total number will therefore be closer to 90,000 once all is verified. I expect 40,000 to 50,000 units to be completed in Dubai in 2020,” said Lynnette Abad, Director of Data and Research at Property Finder.
Dubai’s housing market added 48,729 new units in 2019, which was the highest number of units completed in one year over the last five years.
The communities that saw the most supply added were JVC, Mohammed Bin Rashid City, Dubai South, Town Square and Business Bay, which comprises about 40 per cent of the total residential supply added in 2019, according to the report.