Tenants and buyers continue to have bargaining power as the Dubai residential property market levels off.
- Dubai rental market – One- and two-bedroom apartments experience a 2% decline compared to Q1 2016, with no change in three-bedroom apartments.
- Dubai sales market – No overall decrease in price per sq.ft. suggests the market is heading towards the end of the cycle and bottoming out.
- Dubai commercial spaces for sale – Downtown Dubai identified as highest priced office space at AED 2850 per sq.ft.
- Abu Dhabi rental market – Three-bedroom apartments situated on the Corniche and Sadiyaat Island experienced the biggest drop by 11% and 15% respectively. Overall one- and two-bedroom apartment rental prices decreased by 2% and 1% respectively
- Abu Dhabi sales market – Identified an overall average 3% quarter-on-quarter decline in price per sq.ft.
Dubai’s residential rental property market sees a slowdown in price decline still giving tenants bargaining power.
While observing 11 key communities, a decline in rental prices of 2% for one- and two- bedroom apartments has been highlighted in the report since Q1 2016, whereas no change was recorded for three-bedroom apartments. This indicates that there has been an overall slowdown in the decline of residential rental prices so far this year and it is close to bottoming out.
Dubai’s residential property for sale prices remain unchanged in Q2 suggesting it has leveled off or is bottoming out.
When delving into sale price trends within communities, dubizzle’s report revealed that Jumeirah Village Circle (JVC), Jumeirah Beach Residence (JBR) and Al Barsha experienced a decrease of 3% in sale price per sq.ft. each. Properties within these areas are now selling at AED 867, AED 1586 and AED 1047 per sq.ft. respectively.
Commenting on the sale and rental market in Dubai, Ann Boothello, Senior Product Marketing Manager for Property at dubizzle said “Sale prices have decreased since mid-2014 back when they had reached their peak. The residential property sale price cycle is almost at a close as we have not witnessed any major shifts in pricing from Q1 to Q2 2016.
Rental prices are now in the phase of bottoming out – tenants still have the upper hand with more negotiating power. Landlords are marketing their properties at more competitive prices and agreeing to three- or four-cheques to avoid having vacant properties.”
DIFC Downtown commercial spaces highlighted as the highest priced per sq.ft.,whilst Dubai Silicon Oasis and Deira, ranked as the lowest.
The report also revealed sale prices for commercial spaces in Dubai for Q2 2016. Downtown Dubai was identified the most expensive area to buy office space in with an average of AED 2850 per sq.ft.. Dubai Silicon Oasis, ranked as the lowest priced area at AED 669 per sq.ft..
dubizzle’s findings support those of JLL’s Q2 report, which was launched last month. According to Craig Plumb, Head of Research for JLL MENA, “The Dubai market is now stabilising near the bottom of the current cycle with more attention now shifting to when the market will recover rather than how much further it will fall. The Abu Dhabi market is at an earlier stage of its downturn, with Q2 seeing early signs of a softening in both rentals and sale prices.”
Abu Dhabi experiences a slight decline in prices
The capital experienced an overall average decline in property rental prices, with prices of one-, two- and three-bedroom apartments decreasing by 2%, 1% and 4% respectively compared to Q1 2016.
Three-bedroom apartments in Abu Dhabi Corniche and Sadiyaat Island experienced the biggest drop by 11% and 15%, with annual rental prices at AED 160K and AED 220K respectively.
The cost of living in the capital has increased due to the economic climate; with the recently introduced 3% municipality fee and a decline in salaries in industries that are cost cutting –predominantly in the oil and gas and hospitality sectors – dubizzle predicts a continued decline in on overall rental prices in Q3 2016.
“Families in Abu Dhabi will consider downsizing as they are having to budget better and relocate to smaller, more affordable units. This will put further pressure on rents over the next two quarters and the drop in rental rates for three-bedroom apartments identified validates this,” commented Boothello.
The most searched community in Abu Dhabi was Al Reef with almost 715K searches, followed by Tamouh Marina Square and Al Reem Island with over 415K and 403K searches respectively. This is in line with the emerging trend of residents seeking more affordable property in newer, more affordable areas.
Similarly, an overall quarter-to- quarter average decline by 3% was recorded for property sale prices. Sadiyaat Island experienced the largest drop by 7%, followed by Al Reem Island which experienced an overall average decrease by 4%. Sale prices in Al Reef however, remained unchanged.
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