'Dubai: Follow the Money' trail leads to Springs, Arabian Ranches

Contrary to popular perception, transaction activity in certain upscale Dubai villa communities climbed in the first nine months of 2015 as compared to the same period last year.

This is driven by lower property prices, according to a new report.

“A closer look into transactional activity in the villa space reveals that Springs and Arabian Ranches have already witnessed a year-on-year increase in transactional activity,” Unitas Consultancy and Reidin.com said in its report, ‘Dubai: Follow the Money’.

“This uptick is likely due to the fall in prices that have been witnessed in this segment and we opine that this trend in the market will continue as prices will soften further.

The rise in transaction volumes also indicates market expectations that participants feel that the fall in the market prices may be nearing an end,” it added.

However, a comparison of transactional activity in the high-end mature apartment space between Dubai Marina, Downtown Dubai, Green and Jumeirah Lakes Towers during the period of 2013 and 2015 shows transactions were down by a maximum of 46 per cent and a minimum of 30 per cent.

A comparison between Q3, 2014, and Q3, 2015, reveals an uptick in activity by an average of 8 per cent.

“We opine as prices continue to fall transactional activity will begin to climb as investors and end-users enter the market to capitalise on the available discounts in the market,” the report said.

A comparison of communities such as International City and Discovery Gardens between Q1-Q3, 2014, and Q1-Q3, 2015, reveals that transactional activity has been more resilient in mid-range housing areas, falling only 11 per cent, compared to 21 per cent decline in high-end areas.

The difference is attributed towards the over-valuation of the luxury segment due to the imbalance of supply and demand metrics that have played out in the market.

In November 2015, Cluttons, a global property consultancy, said residential property prices declined in five successive quarters and are likely to fall a further three to five per cent over the next 12 months due to a faltering global economy and an increasing supply of residential units.

Villa and apartment prices declined 0.5 per cent and 0.8 per cent, respectively, in the third quarter 2015.

Prices dropped 3.5 per cent in the 12 months to September-end.

It expects 7,400 completed units to be handed over in 2016, 10,300 in 2017 and 13,600 in 2018.

HSBC Global Research said in 2014 that Dubai may see supply of 90,000 new units by 2018, but the market will absorb – fairly easily — the new supply even if the population grows less than five per cent per year.

A report issued by CBRE, a global property consultancy, has pointed out that property prices in Dubai were nearly two times cheaper than London, with average prices for the top-of-the-end market here being Dh4,771 ($1,300) per square feet (psf) compared with Dh11,010 ($3,000) psf in London.
 

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