Dubai - MENA Herald: The third quarter 2015 real estate report issued by leading local consulting firm ValuStrat - has shown that, with a steady decline in prices, stagnant investor interest, delayed supply, stable rents and decreasing sale volumes, statistical analysis suggests that the next year may witness a plateau in prices, indicating a buyer’s market with deals being encouraged as a result of price negotiation by vendors.
The Residential VPI (ValuStrat Price Index), which is a 100 point index that started tracking residential values in 26 key locations in Dubai from January 2014, has shown a 10.3% annual decline and 0.9% quarterly dip in property values. July’s VPI registered 98.4 points, while August and September registered 98.2 and 98.1 points respectively.
Residential transacted prices saw a 14.7% annual decline, although investor interest has increased for bargains and distressed sales with a sentiment of improved market activity in the coming months.When compared to the second quarter, transacted residential prices dropped by 5.6%. The median transacted apartment price stands at AED 10,850 per sq m (AED 1,008 per sq ft). The median transacted villa price stands at AED 11,496 per sq m (AED 1,068 per sq ft).
On average, apartment asking rents dipped by 4% in comparison to the same period last year, and villa rents were down by 6%. Compared on a quarterly basis, apartment asking rents declined slightly by 1%, and villa asking rents fell by 4%. However, overall residential rents were 1.6% higher than the same period in 2013.
In terms of housing supply, Dubai’s residential market anticipates a total supply of 18,000 apartments and 3,770 villas in 2015.Fifteen off plan projects were launched in Q3 to add more than 30,000 units to the residential pipeline by 2025.
“…27% of this year’s residential projects with approximately 7,800 units scheduled for completion, are delayed and have been rescheduled for handover during the next two years, reflecting some construction slowdown in this sector…”added Haider Tuaima, ValuStrat Research Manager.
Office transaction prices decreased by 4.6% since last year and 5.2% since the second quarter. Having said that, office sale asking prices during Q3were 22.1% higher than two years ago. Average office asking rents performance slowed to negative growth of 2.4% since the same period last year. The median asking rent for office space in Dubai is AED 1,141 per sq m (AED 106 per sq ft), DIFC liststhe highest asking rents of AED 3,218 per sq m (AED 299 per sq ft).
This year will see an additional 230,000 sq m (2.4 Million sq ft) of Gross Leasable Area (GLA) to be added to the existing 3.1 million sq m (33.4 Million sq ft) of the existing retail stock, representing a 7.3% increase. Key retail additions include phase one of City Centre Me’aisem, which is strategically located in IMPZ (International Media Production Zone), as well asa further 25,000 sq m (270,000 sq ft) of GLA added to the existing Mall of The Emirates.
The Dubai hospitality sector saw the total number of hotel rooms and hotel apartments at the beginning of Q3 2015 standing at 97,409. Fourteen new hotels were announced in Q3, adding 6,413 keys to the pipeline in the next 4 years. The average occupancy rate in Q3 was 69% - impacted by the off-peak hot summer months and occurrence of Ramadan. July and August saw occupancy rates of 57.6% and 74.2% respectively, while September’s was 76%.Continued downward pressure on room rates is expected during the next quarter.