The annual decline in the cost of Dubai housing remains double-digit in percentage terms
Residential property prices in Dubai in the third quarter of 2018 decreased by 4% compared with the second quarter. This indicator of quarterly price reduction turned out to be approximately equal in the segment of apartments (apartments) and houses (villas). Such data was voiced by real estate agency Asteco Dubai.
On an annualized basis (compared to the third quarter of 2017), apartment prices fell by 13%, while house prices fell by 14%. The rent has decreased by 3% compared to the second quarter of this year by 3% for apartments and villas. On an annualized basis, rental apartments in the emirate fell by 11%, rental homes – by 9%.
The publication International Investment notes that the data of only one market operator, even a large one, may not reflect the completeness of the market picture – they are only useful for understanding general trends.
In the third quarter, market activity was mainly focused on the secondary real estate market. The economic situation is not conducive to the launch of new projects, therefore, in the construction industry, the activity has been reducing mainly to the completion of previously started facilities. New construction projects practically do not appear either in Dubai or in the UAE as a whole.
A relatively new trend in the local market is to change the initial plans of developers – leasing housing built for sale, and attempts at crowdfunding – raising funds to complete the construction of frozen objects (in fact, this is a conventional pre-sale).
In the first case, this further increases the oversupply in the rental market and pushes rental rates.
In addition, real estate market participants increasingly expressed their opinion that the Central Bank of the UAE will lower interest rates in order to make mortgages more affordable.
The total volume of housing, which will be built in 2018, is tentatively estimated at 16,750 residential units. Although this figure is steadily declining, it still remains significant and continues to contribute to an increase in supply and lower prices.
Basically we are talking about construction projects that were launched before the onset of the oil crisis in such large numbers that they formed a long-term supply of pressure on the market. The builders expect that only next year this stock will finally be exhausted.