Price recovery in 2021 as rate of decline slows in H2 2019 – Property Finder reports
The rate of decline in property prices in Dubai slowed considerably in H2 2019 as buyers began to take advantage of the value to be found in the market, according to the ‘Property Finder Trends’ report released today by the leading portal.
Although advertised prices continued to fall in most areas in H2, the rate of decline slowed sharply as buyer appetite increased and the willingness of sellers to drop prices neared its limit. It is likely that prices will stabilise in 2020, before recovering in 2021, as delivery rates of new supply start to fall. Property launches have reduced considerably since last year and with a new committee in place to balance supply and demand, developers are more likely to focus on completing their existing projects.
According to Data Finder, the real estate data and insights platform under the Property Finder Group, asking prices of Dubai villas declined at a rate of -3.2 percent, down from a rate of -4.3 percent in H1 2019. Apartments fared better in Dubai, with prices falling -1.1 percent, down from -3.9 percent in H1 2019.
“I do not expect to see any further major falls as developers will hold their top line, offering incentives instead of price reductions, and we are now seeing the natural ‘hand brake’ to price falls in the secondary market; namely the inability and unwillingness of sellers to drop prices further. Whether it is due to negative equity or simply a refusal to go lower, an increasing number of sellers are withdrawing from the market and opting to hold their assets, which is creating a lack of quality listings in the secondary market. Distress sales and real bargains are becoming more and more scarce and I suspect it won’t be long before prices in the secondary market start to regain some ground,” Richard Waind, Group Managing Director, Betterhomes, told ‘Trends’ magazine.
Dubai sales market
In the apartment category, communities that registered the biggest six-month asking price declines in H2 2019 were Barsha Heights or Tecom (-13.4 percent), Jumeirah Lakes Towers (-11.9 percent), Damac Hills (-9.7 percent), Discovery Gardens (-7.7 percent) and Dubai Marina (-7 percent).
In the villa/townhouse market, communities that recorded the biggest six-month asking price declines were JVC (-8.7 percent), Jumeirah Village Triangle (-4.6 percent) and Motor City (-4.5 percent).
Dubai registered 41,988 overall real estate sales transactions in 2019. Of those transactions, 23,643 were for off-plan properties and 18,345 for secondary properties, lending to a 60 to 40 percent split between off-plan and secondary buying, as per Data Finder.
“There were 30,158 transactions attributed to apartment sales, a 16.4 percent increase from the same time period in 2018; 7,630 transactions are attributed to villa and townhouse sales, a 73.96 percent increase from the same time period in 2018. There was an increase in the number of villa and townhouse projects reaching completion last year. This was compounded by the amount of residential supply from 2018,” says Lynnette Abad, Director of Data and Research, Property Finder.
Dubai rental market
Asking rental prices continued to fall at a faster rate than sales prices in many places. Advertised rents for Dubai apartments fell by -2.4 percent in H2. Demand has not been able to keep up with handovers and landlords are having to be flexible to attract and retain tenants. The rent decline in apartments was pronounced in areas of high new unit delivery such as Jumeirah Village Triangle (-13.8 percent), Town Square (-10.8 percent) and Dubai Sports City (-10 percent).
Dubai villa/townhouse advertised rents also fell by -2.9 percent, but at a slower rate in H2 as more apartment tenants turned their eye to villa living. Villa communities that experienced the biggest rent decline were Motor City (-11 percent), Reem (-4 percent) and JVT (-3.9 percent).
40,000 to 50,000 units set for completion in 2020
“Based on 176 projects that we have checked, verified and updated, at least 61,646 units are expected for 2020. In addition, there’s still 198 projects that are scheduled to be completed by 2020 which still need to be verified by us. Within these projects, there are 32,084 units in total. The total number will therefore be closer to 90,000 once all is verified. I expect 40,000 to 50,000 units to be completed in Dubai in 2020,” adds Abad.
Dubai’s housing market added 48,729 new units in 2019, which was the highest number of units completed in one year over the last five years. The communities that saw the most supply added were JVC, Mohammed Bin Rashid City, Dubai South, Town Square and Business Bay, which comprises about 40 percent of the total residential supply added for 2019, according to Data Finder.