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ValuStrat Issue Q3 2016 Dubai Real Estate Market Report
(16 October 2016)

 

The third quarter 2016 real estate review issued by leading local consulting firm ValuStrat –has shown that half of the freehold apartment locations monitored by the ValuStrat Price Index have initiated a gradual price recovery, whilst most freehold villa locations witnessed a continued marginal softening in values. Increased quarterly residential sales prices, coupled with lower overall quarterly transaction volumes, indicates a cyclical trough stage for the residential market.

The third quarter in-depth residential ValuStrat Price Index (VPI) report has been released, analysing 26 freehold locations in Dubai on a monthly basis, it has shown that mostly mid-affordable locations initiated the price recovery process, with quarterly increases ranging from 2.3% to 4%. The exception being high-end Downtown Dubai, which also witnessed a clear trend of positive correction over the last six months. The third quarter 2016 VPI displayed an overall marginal 0.6% annual decline in values. However, the monthly growth rate of residential values has been broadly stable for the past 15 months, but marginally declined this quarter, which was expected. The July residential VPI registered 97.7 index points while August and September both dipped by 0.1% to 97.6 and 97.5 index points respectively.

“…Even though sales transaction volumes came down in Q3, which is expected during the quieter summer months, DLD transacted sale prices for residential apartments have increased noticeably at 6.6% annually and 5.2% on a quarterly basis …” added Haider Tuaima, ValuStrat Research Manager.

Residential investment yields have compressed slightly, as median asking rents were 8% lower than Q3 last year and 7.1% lower than Q2 this year. The highest net yields were registered in mid-affordable locations - ranging between 6.5% to 7%.

For 2016, the latest estimated total supply of residential apartments and villas to be completed amounts to 15,191 units. Ten off-plan housing projects were launched in Q3 to add more than 2,000 units to the residential pipeline by 2020.

Office transaction sales prices fell by 8.3% since last year but remained stable since the last quarter. Median asking rents for office space fell 9.3%annually, and 4.9% since the previous quarter. The median asking rent for office space was AED 1,076 per sq m (AED 100 per sq ft).

This quarter saw an estimated additional 140,000sq m (1.5million sqft) of Gross Leasable Area (GLA) delivered in prime retail malls as a result of the inauguration of phase one of the Italian themed Outlet Village mall by Meraas, located in Jebel Ali, and Majid Al Futtaim’s My City Centre Al Barsha.

The total number of hotel rooms and hotel apartments as of August 2016 in Dubai has crossed the 100,000 mark, with 100,211 units. Average occupancy during period January to August was 76%, compared to 77% during the same period last year. With 5% more hotel rooms since last year, YoY Average Daily Rate (ADR) for the same period dropped by 10.8% and Hotel Revenue Per Available Room (RevPAR) fell 11.3% YoY.

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