Q3 2018 report provides a summary of the Dubai residential market as well as a sector focus on building consultancy. Price movement, rent and yield statistics, residential transactions and upcoming supply of residential properties are provided through Property Monitor, a real estate 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 and predictions by professionals, which are studied against real performance.
HOUSE PRICE TIMELINE
In Q3 2018, villas/townhouses have traded at around AED 1.9 million and apartment transactions have averaged AED 1.2 million.
Transacted prices for villas/townhouses have settled lower than the 2017 average during Q3 2018 and the price gap is narrowing between apartments and independent homes. Prices for apartments are also shifting towards the lower end of the band, averaging at AED 1.2 million in Q3 2018.
Secondary market transfers, which began outpacing off-plan activity for villas/townhouses since November 2017, have continued the trend this quarter. Meanwhile, in the first nine months of 2018, off-plan transfers for apartments have continued to lead the tally as developers focus their attention on lower-priced inventory, aggressive payment plans, fee waivers and other incentives.
According to data from Property Monitor, 26% of the off-plan transfers for apartments in the first nine months of 2018 were in the AED 1,200 to 1,500 per sq ft price bracket. By comparison, the most active price band in the secondary market for apartments (26% of total) was the AED 500 to 800 per sq ft segment. Studio and one bedroom units continued to be the most active type transferred in both the off-plan and secondary market in 2018 to date.
Dubai House Price Timeline Sales Price (AED) from January 2008 to September 2018
According to the Property Monitor Index, apartment and villa/townhouse prices have registered 12 month declines of 3.4% on average.
In Q3 2018 sales prices across the residential market registered quarterly declines of 1.4% and 1.3% for villas/townhouses and apartments respectively. Subdued economic activity and handover of new supply later this year is likely to exert further downward pressure on housing sales prices.
Meanwhile, the announcements by the UAE government in 2018 on new ten-year visa regulations and a five-year residency visa for retired expatriates, could have a positive impact on market sentiment in the short term.
However, the details of the new retiree visa options are yet to be announced and the direct impact on the real estate sector would only become visible after it has been implemented, which is expected in early 2019. According to information released so far, to qualify for the retiree visa, an expatriate should have an investment in a property worth AED 2 million, or financial savings of around AED 1 million, or have an active income of AED 20,000 per
Rent declines for residential properties in Dubai averaged 6% over the last 12 months and 1.3% on average quarter on quarter
Rental declines were more pronounced in Dubailand, The Greens in Emirates Living, Motor City, Arabian Ranches and Victory Heights averaging 12 month change of around 7%. Rent decline is expected to continue during the last quarter of the year and beginning of 2019, with new handovers planned in both freehold and leasehold communities across Dubai.
However, the impact on some developments will be less notable if they benefit from unique demand drivers such as beachfront location, quality finishes and superior community facilities.
Rental Cheques For Apartments and Villas/ Townhouses
According to Property Monitor’s database of rental contracts, the majority of the rental agreements for residential properties in Q3 2018 were in one cheque (45% of total), which has increased by 7% compared to last quarter. Rental payments made in 4 cheques decreased by 2% over the quarter.
Q4 2018 – Q1 2019 UPCOMING SUPPLY
Approximately 6,000 residential units have been handed over across Dubai in Q3 2018.
The majority of the handovers during the third quarter of 2018 were in Jumeirah Village Circle, Downtown Burj Khalifa, Town Square, and Dubai South with more than 300 units being handed over in each location.
More than 72% of the handed over units were apartments. For the remainder of the year the majority of the upcoming supply is concentrated in Business Bay, Jumeirah Village Circle, Dubai Sports City, Dubai Silicon Oasis and Town Square.
RESIDENTIAL SALES OVERVIEW
Off-plan transfers accounted for 53% of the total transfers in Q3 2018
Business Bay, Mohammed bin Rashid City and Jumeirah Village Circle dominated the off-plan apartment transfers during the third quarter of the year.
On the other hand, International City, Dubai Marina, Jumeirah Village Circle led the secondary market apartment transfers, which accounted for 31% of the total apartment secondary transfers during Q3 2018. Secondary market transfers among villas surpassed the off-plan transfers in Q3 2018, led by Emirates Living, Arabian Ranches, Mudon developments which together accounted for 30% of the total secondary market transfers registered during the third quarter.
- The majority of agents surveyed had predicted apartment and villa/ townhouse prices to decrease by up to 5%.
- The majority of agents had predicted that apartment and villa / townhouse rents would decrease by up to 5% in Q3 2018.
- The majority of agents had predicted new buyer enquiries, seller instructions and agreed sales would increase in Q3 2018.
- Apartment and villa/townhouse prices have declined on average by 1.3% in Q3 2018 with 12 month decline of 3.4% on average.
- Apartment and villa/townhouse rents declined by 1.3% QoQ though 12 month decline is around 6% on average.
- According to data from real estate agencies, transaction levels for Q3 2018 are lower than Q2 2018.