Glut to hamper property prices in the short term while competitive incentives attract property seekers
Home prices in Dubai continue to be competitive, tantalising home buyers from around the world even as the emirate remains in the grip of oversupply.
Apartment and villa prices sagged four percent between the first and second quarters of 2019, while rents for both unit types sank five percent and eight percent, respectively, according to Chestertons’ latest quarterly market report.
A downward pressure in prices stem from a glut of units set to inundate the emirate this year. Around 47,502 apartments, villas and townhouses are due for completion in 2019, almost twice the 20,000 residential units volume delivered in 2018. Price declines are likely to be exacerbated by an uptick in supply in the run-up to the Expo 2020, ensuring the emirate’s market is occupier- and buyer-friendly, with property seekers spoiled for choice in terms of pricing and build quality.
“In the short term, oversupply will continue to dampen the value of Dubai’s residential real estate market,” said Nick Witty, managing director for Chestertons MENA.
“This is being compounded by several developer incentives including five-year post-handover payment plans, registration fee rebates, freezing property service charges and guaranteed rental returns. Similarly, landlords are offering prospective tenants rent-free periods, multiple rent cheques, and even short term leases.”
Such incentives have propelled transactions of off-plan units to increase by four percent between quarters, although transaction values were down eight percent.
Transaction values of completed homes, meanwhile, surged a whopping 31 percent, indicating buoyant demand from end users. Transaction volumes for completed homes also moved forward two percent.
“The bottom line is Dubai will continue to be tenant and home buyer-friendly for the foreseeable future, until demand has caught up with supply,” Witty said.
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