Dubai house prices are flatlining, says ReidIn
Dubai’s residential property market has shown signs that declining values may be coming to an end, according to brokers, with new figures from property data coompany Reidin stating that residential values were flat in the 12 months to November 2016.
Reidin reported a tiny monthly decline in prices of just 0.01 per cent during November, echoing earlier trends of slight falls in prices during the year. Rents, though, have continued to fall, dropping 0.7 per cent month-on-month to finish 6 per cent lower on a yearly basis.
Haider Tuaima, the research manager at consultancy ValuStrat, said that ReidIn’s figures broadly matched its own index, which has not displayed any significant declines in property values throughout this year.
Its index values a basket of properties in 26 freehold areas across Dubai (16 apartment and 10 villa communities). Its fourth quarter report, due to be published next month, is likely to report a decline in the index value of around 0.5 per cent year-on-year. Several mid-market areas, however, were showing signs of a strong recovery with valuations increasing by 2 to 3 per cent per month, he added.
“Generally speaking, half of the 16 apartment areas are starting to see some growth,” Mr Tuaima said. “That’s been going on for the last six months.”
He said the communities witnessing upturns in value included IMPZ, International City and Discovery Gardens.
“Motor City is actually the star of the show at the moment. It is about 5 per cent away from its peak in 2014,” he said.
His firm is forecasting a “soft recovery” in affordable communities such as International City, Discovery Gardens and Remraam next year as investors chase higher returns.
“The yields have been up to 9-10 per cent in these areas for a while,” he added.
Ismail Al Hammadi, the managing director of brokerage Al Ruwad Real Estate, said that Dubai’s residential property market had “proven relatively stable” over the past six months given the volatile nature of geopolitical events, Brexit, the US election and persistently low oil prices.
He argued the market is “showing the first signs of recovery, which will most probably become evident in 2017”.
Dima Isshak, the head of research for property agents Chestertons MENA, said that “the rate of decline has decreased in 2016, especially in the last half”.
Despite this, she was “hesitant to make statements saying ‘this is the bottom of the market’, because those things can’t really be predicted”.
Mr Al Hammadi sounded a cautionary note about the risk of oversupply of new units, especially in affordable communities. “The balance between demand and supply is very fragile,” he said.
Mr Tuaima said that only about 30 per cent of units scheduled for handover this year had been delivered, which was “a blessing in disguise” for the market. This was partly due to developers’ financial concerns, but also a result of external factors including delays in the handover of apartment towers until Dubai’s new fire code is in place, he said.
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