New supply to exert pressure on Dubai’s property market

Dubai’s property pipeline will exert continued pressure on the residential market with an additional 10,000 units set to be delivered this year and a further 70,000 before Expo 2020, says a recent report.

According to the Dubai Market Report Q3 2018 by Chestertons, apartment and villa rental rates have declined four percent and three percent respectively while sales prices for both property classes declines by six percent, despite several positive initiatives by the UAE government.

“Without a significant decline in construction activity, a boost in population, and short-term economic stimulus, it is unlikely the residential market will have any respite for the remainder of 2018, resulting in an expected supply/demand equilibrium scenario in the next three to five years,” said Ivana Gazivoda Vucinic, Head of Consulting and Valuations and Advisory Operations, Chestertons MENA.

In the rental market, the biggest adjustments were seen in smaller units due to additional apartment supply and greater affordability in larger units resulting in a Q-on-Q studio decline of six percent, noted the report.

In addition, the report also said that prices continued the downward decline witnessed throughout 2018, with no let up for at least another year, from a sales perspective.

The volume and value of transactions for completed units dropped by 11 percent and 13 percent respectively, the report said. However, this was eclipsed by the decline in off-plan transactions, with a 31 percent decline in volume and 33 percent decline in value.