Burj Khalifa apartments lose a quarter of their value in 12 months
Prices for apartments in Dubai’s Burj Khalifa have dropped by about a quarter on the secondary market over the past 12 months, highlighting the weakening demand for luxury property, according to a new report by the property consultancy Cluttons.
The firm’s Spring Property Market Outlook states that prices in Emaar Properties’ flagship tower dropped by 6.9 per cent in the last three months alone, which it said was indicative of a much broader aversion to luxury homes. Prices for Hattan Villas at The Lakes have dropped by 13.5 per cent year-on-year and the Hattan Villas at Arabian Ranches have dropped by 12.6 per cent. Apartment prices on the Palm Jumeirah have fallen by 11 per cent.
The firm said that the lack of demand stems from underlying affordability issues and continued uncertainty over the health of the global economy.
“The rate of creation of senior-level executive positions has fallen, and this is reflected in the lower level of enquiries and budgets we are recording,” said Cluttons’ head of research, Faisal Durrani. “The redundancy programmes in the city’s finance and banking sector and oil and gas sector have all but run their course, but the weak global outlook is putting other key sectors under pressure, including the hospitality and aviation sectors, both of which are longstanding and historic cornerstones of economic growth.”
Overall, however, the firm argued that the rate of price declines where slowing, dropping by 0.9 per cent during the first quarter of this year, bringing the year-on-year decline to 7.8 per cent – a slight improvement on the It suggests that the market will bottom out by the end of the year, although it said there are a number of factors that are likely to keep pressure on prices downwards for now, including changing demands for high-level staff, the introduction of value-added tax and concerns over increasing supply, which is affecting rents.
For instance, completions of the Mira town houses and villas at Emaar Properties’ Reem Community are affecting the more mature Arabian Ranches community next door.
About 1,200 units have been handed over at Mira over the past six months, and these are generally renting for Dh120,000-Dh140,000 a year, compared to typical rents of Dh170,000-Dh220,000 at Arabian Ranches.
Cluttons said that tenants were “aware of the burgeoning rental supply levels and are taking advantage of conditions by seeking out the best perceived value for money”.
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