Cavendish Maxwell is a highly respected, independent firm of chartered surveyors and property consultants, focusing on property services throughout the Middle East and Africa. Established in 2008, Cavendish Maxwell is now one of the region’s most influential property consultancies. We provide comprehensive and detailed reports prepared to internationally accepted standards that meet a diverse range of client requirements. As a fully qualified member firm of the Royal Institution of Chartered Surveyors (RICS), with extensive knowledge of the region, we have the necessary experience, expertise and insight to deliver property advice of the highest standard.
Our experience covers property, land and business asset valuations; investment; disposals and acquisitions; rent reviews; lease renewals; development appraisals; advisory services; market research; feasibility studies; education advisory and valuation; project management; building consultancy and data analytics.
Our Quarterly Residential Market Report for Dubai provides an analysis and summary of the apartment and villa/townhouse properties, as well as the factors affecting housing demand. Price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties is provided through Property Monitor, a real estate data analytics and intelligence platform, powered by Cavendish Maxwell. The report also incorporates the Property Monitor Residential Survey, conducted among partner agents operating within Dubai.
The survey showcases how new enquiries, leasing activity and transactions, among other metrics, changed over the previous quarter. It also provides an outlook on the following quarter, with predictions by professionals being studied against real performance.
Dubai House Price Timeline
In 2017 residential property transaction prices traded within a close range of AED 1.25 to 1.5 million for for apartments and AED 1.7 to 2.1 million for villas/townhouses on average.
Note: Dubai House Price Timeline tracks residential property transactions from Dubai Land Department (off-plan and secondary to derive secondary) to derive monthly and quarterly average transacted prices for apartments and villas/townhouses.
Lower priced inventory continues to enter the market in locations such as Dubailand for villas and Dubai South, Jumeirah Village Circle and Al Furjan for apartments, thus impacting price dynamics for existing developments. Developers are launching more efficient unit sizes to keep ticket prices attractive, along with offering incentives, such as Dubai Land Department (DLD) fee waivers and aggressive payment plans. For established developers with alternate sources of project financing (such as equity from conglomerate businesses or raising debt from the market), margins may be protected or enhanced through such payment plans, as these allow them to attract buyers without discounting prices. The majority of the new plans on offer are structured with post-handover payments such as 40/60 and 25/75 schedules, where the bulk of the payment (e.g. 60% and 75% in the above examples) is due after construction completion.
Additionally, mortgages have become more accessible as banks are also offering newer products to this segment. The DLD reported that for property transactions in Dubai, the value of mortgage transactions increased to AED 60 million in the first six months of 2017 from AED 48 million over the same period last year. These factors are together helping expand the buyer base for residential properties in Dubai.
Housing demand in Dubai is primarily a factor of affordability as well as population growth, particularly of the white-collar labour force, as blue-collar workers are housed in speciality accommodation in line with the 2014 decree and subsequent 2016 announcement. According to recently released data from Dubai Statistics Centre, the total population for the emirate in 2016 stood at 2.7 million, rising by nearly 16% since 2014, which was the last residential market peak. In comparison, the white-collar population has increased by 5% over the same period to reach 1.1 million in 2016 and the percentage contribution of the white-collar workforce in the total population has declined from 44% in 2014 to 40% in 2016.
While investor demand for residential properties in Dubai continues to remain strong, as witnessed in transactions levels over the last 18 months, the sluggish growth in the white-collar worker population combined with new supply is impacting rents and contributing to high vacancy levels in some emerging communities. Over the next two years, job creation ahead of Expo 2020 is expected to attract additional labour force to the emirate, though it remains to be seen what percentage of that will be white-collar population and hence translate into housing demand.
Prices in established communities with limited upcoming supply have held stronger than emerging locations even as marginal price declines continued in Q3.
According to the Property Monitor Index, 12 month change in prices for key communities in Dubai registered marginal declines of 1.2% for apartments and 1.4% for villas/townhouses as of September. This downward trend over the last twelve months has created a wider gap in the price performance of quality stock in established areas with limited upcoming supply against that of newer developments in emerging locations. Factors such as proximity to central business district, social infrastructures like schools, supermarkets as well as build quality and developer track record will continue to play a larger role in maintaining price levels in the Dubai residential market.
Rent declines for residential properties in Dubai have been more pronounced than price declines over the last 12 months.
Over the last 12 months, rents in Dubai have declined by 2.8% for apartments and 3.5% for villas/townhouses on average, according to the Property Monitor Index. This has resulted from a combination of factors including new project handovers, especially of lower priced inventory, as well as the readjustment of salaries and job losses in some key sectors. In response, to limit void periods on their properties, landlords have begun offering incentives such as the first month rent free as well as the option to pay through multiple cheques. According to Property Monitor, four cheques annually are now the average compared with the earlier practice of single cheque payments being prevalent in the Dubai residential market.
More than 8,900 residential property transactions were recorded in Q3, with July accounting for nearly 40%.
Off-plan sales continued to drive residential market activity in the third quarter, accounting for 77% of the total with nearly 6,850 transfers. The current momentum in sales activity is driven by a larger proportion of end users than before, particularly first-time buyers, who are entering the market enthused by lower prices and encouraged by attractive payment plans offered by some developers. The introduction of new innovative mortgage products by some local banks has also contributed towards this increased activity. Prices and accessibility criteria for a home mortgage, traditionally the two biggest barriers for new entrants to the property market, have been lowered, thus resulting in an uptick in market activity.
Approximately 11,800 residential units have been handed over across Dubai this year.
As of September 2017, approximately 32,000 units are scheduled for handover for the remainder of the year, though actual completions may vary significantly. New supply continues to exert pressure on rents, which have been declining at a faster pace than prices over the last 12 months. Some developers have begun responding to this market reality by phasing the delivery of projects. Additionally, master developers are also differentiating among the various asset classes within their master plan, such as residential, retail, schools, hotels, etc., to launch and begin construction for projects in line with prevailing absorption trends. The profile of transacted properties is also driving unit size and mix optimisation within residential projects to match end user demand more closely than ever before.
According to the Property Monitor Supply Tracker, the upcoming supply for the remainder of 2017 is largely concentrated in Dubai Marina, Jumeirah Village Circle, Dubai Sports City, Al Quoz and Business Bay. All these locations have more than 2,000 units projected to be handed over in the last quarter of the year.
Property Monitor Residential Survey – Q3 2017 Looking back – Q3 2017
- The majority of agents surveyed had predicted apartment and villa/ townhouse prices would remain unchanged.
- The majority of agents had predicted that apartment and villa/ townhouse rents would remain the same during Q3 2017.
- The majority of agents had predicted new buyer enquiries, seller instructions and agreed sales would increase in Q3 2017.
- Apartment and villa/townhouse prices have remained largely stable in Q3 2017 with a 12 month decline of 1.0% on average.
- Apartment and villa/townhouse rents have remained largely unchanged QoQ though 12 month decline is around 4% on average.
- According to data from real estate agencies, transaction levels for Q3 2017 are higher than Q2.
Sale prices and rents are derived from Property Monitor
(www.propertymonitor.me), a comprehensive real estate data analytics platform established by Cavendish Maxwell in 2014. Property Monitor provides real-time, market-wide transactional data and trends. Working with agencies, banks, developers and corporate investors, it provides deeper insight into real estate advisory, investment, and lending activities. The average sales price per sq ft is based on the Property Monitor Index which incorporates signed contracts, registered transactions, valuations and listings verified by Cavendish Maxwell’s market leading valuation department.
Property Monitor Residential Survey is a quarterly study of agent opinion designed to identify residential market sentiment. This research highlights how new enquiries, leasing activity and transactions, among other metrics, changed from quarter to quarter with agent predictions compared to actual real market performance.
Supply projections for residential projects are based on the regular tracking of construction projects, new launches and delays etc. This is achieved through site inspections as well as regular feedback from developers, contractors, Cavendish Maxwell’s building consultancy team and related government entities.
Strategic Consulting and Research
Cavendish Maxwell’s strategic consulting and research team uses its in-depth knowledge of the real estate sector and extensive network to support our clients through the development process, providing strategic consultancy and advice to guide and support investment decisions from concept to delivery.
We have advised on schemes with a gross development value of over AED 3 billion in the last year. Our reports are used internally for business planning purposes and to satisfy the criteria of external financiers and auditors.
Our name is trusted by all major banks across the UAE, supported by our presence on over 35 bank panels across the region.