Dubai Rents And Property Prices Set To Fall Again

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Property prices and rents are expected to take a dive in Dubai before the end of the year.

Property consultants are forecasting both will drop by up to 5% by December, after the number of properties changing hands has fallen by 20% already in 2018.

But upbeat property firms are hoping that the rot will stop and the number of transactions will pick up before the end of the year as they count the cost of falling commissions.

One firm, Cavendish Maxwell, reckons the sale prices of apartments went down by 1.3%, while villas saw a decline in value of 1.4% in the third quarter of the year.

Rents averaged a 1.3% fall – but in some neighbourhoods the drop reached 7% year-on-year by the end of September.

Bad news for developers

Another firm, Chestertons, expects more properties coming to the market to keep downward pressure on rents.

“Increasing handovers will continue to impact rents in most locations across Dubai as tenants have more choice. This will also impact occupancies in existing stock and should be factored into net yield estimations for the forthcoming period,” the report said.

The company had no good news for developers, home owners looking to sell or landlords.

In an internal Q3 report, average sale prices for apartments and villas were said to have dropped by 6%.

And the Dubai property market correction which started more than two years ago is expected to last for another three to five years.

Expo 2020 boost

The government feels the market will go the opposite way, citing the launch of retirement visas and the completion of infrastructure projects for Expo 2020 stimulating a demand for homes.

“As we approach the end of 2018, we expect the market to reveal additional investment advantages, especially in the presence of competition among investors, and the incentives announced by the Dubai Government to attract capital,” said Dubai Land Department director general Sultan Butti bin Mejren.

“This, along with the completion of some infrastructure projects that were announced in the past few years in support Dubai’s preparations for Expo 2020, helps Dubai’s real estate horizon to broaden, increasing demand for residential units, commercial spaces, and lands.”

However, he confirmed Dubai saw around 13,000 fewer homes change hands to the end of December than in the same period last year.

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