Residential rents and property prices in Dubai became more affordable with real estate consultancies reporting drop in rents and purchase rates in the second quarter of 2015.
According to a report by Abu Dhabi Islamic Bank (Adib) on Dubai’s real estate sector, rents in Dubai dropped three per cent on supply of new units in the second quarter of this year, underscoring two earlier reports released this month about decline in rental rates.
A majority of the new 6,750 residential units came up along the Sheikh Mohammed bin Zayed Road (MBZR) with International Media Production Zone (IMPZ) area accounting for 26 per cent of the total supply.
Real estate consultancy Asteco said in its Q2 2015 report that apartment and villa rents across Dubai fell by an average 2 per cent in 2015.
Another real estate consultancy CBRE said rental market recorded marginal deflation in rates during Q2, posting the first quarterly drop since 2011.
Rentals within the villa market saw the steepest decline, falling by an average of three per cent as compared to a two per cent dip in apartment rentals, CBRE said.
Adib report maintains the new supply of 6,750 units took the total number of residential units in Dubai to 479,000 by the end of the second quarter of this year.
Biggest fall was in Business Bay property prices, said the Abu Dhabi-based bank’s report. Buying property in Business Bay became cheaper, recording a five per cent drop in value.
Capital values for completed apartment units fell 3.5 per cent quarter-on-quarter, with averages sale prices in Business Bay witnessing the biggest fall of five per cent, it said.
“The volume of new projects in the Dubai market means that properties will increasingly need to appeal to potential buyers’ sense of value.
“That means a shift towards well managed, self-contained and mid-market properties, particularly close to the Expo 2020 site,” said Paul Maisfield, CEO of MPM Properties, the real estate advisory subsidiary of Adib.
“We are also seeing a greater emphasis on buyer incentives and unique selling points, especially in the luxury segment and expect buyers to benefit from these trends,” he noted.