x Abu Dhabi, UAEWednesday 26 July 2017

Dubai house prices and rents still slipping but worst appears to be over

Market is stabilising according to Reidin after double digit falls in 2015.

Canal Villas at Emaar's development The Views in Dubai. House prices in Dubai eased slightly in December. Reem Mohammed / The National
Canal Villas at Emaar's development The Views in Dubai. House prices in Dubai eased slightly in December. Reem Mohammed / The National

Average house prices in Dubai fell by 0.14 per cent in December as investors search for signs that price falls are finally levelling out.

According to the property data company Reidin, house prices fell by an average of 11 per cent over the 12 months of 2015 as lower oil prices, the strong dollar and geopolitical unrest continued to affect the city’s real estate.

Both apartment and villa prices were affected, Reidin said, with apartment prices in December falling 0.14 per cent compared with the previous month – translating to an 11.1 per cent year-on-year fall. And villa prices were down 0.10 per cent compared with the previous month – a 10.9 per cent fall compared with a year ago.

However, Reidin said that rents in the city had fallen far less dramatically – dropping 1.03 per cent month-on-month and by an average of 3.2 per cent over the year.

It found that average apartment rents fell 1.1 per cent compared with the previous month and 2.9 per cent over the year, while villa rents were down 0.64 per cent month-on-month but fell 4.6 per cent compared with a year earlier.

In undersupplied Abu Dhabi, it was a different story, Reidin said that average house prices had stayed pretty much static all year, declining by just 0.8 per cent over the year and barely moving in December.

It said that apartment prices were down by an average of 3.4 per cent over the year but actually increased slightly in December. Villa prices rose by an average of 2.4 per cent over the year and 0.7 per cent in December from a month earlier.

At the same time rents in the capital reportedly fell 3.8 per cent over the year and were down 1.36 per cent in December compared with the previous month.

In January last year the property broker JLL predicted house prices and rents in Dubai would fall by 10 per cent as the market reacted to the dramatic house price inflation over the previous 18 months.

“Following a rapid increase of residential rents and prices between 2012 and 2014, the market has now clearly stabilised, with sales prices falling in Dubai and remaining stable in Abu Dhabi during 2015 – but with a significant decline in transaction volumes in both markets,” said Craig Plumb, head of research at JLL Mena. “Prices are expected to decline further over the next six months.”

But last month the consultancy ValuStrat reported “no significant change” in values of apartments and villas in the 26 areas that it monitored in Dubai in December, leading the research manager Haider Tuaima to say that it indicated “a plateau in prices”.

Mr Tuaima said: “Some might suggest that this is a bottoming out of the market, and the only next step is for values to go up. We are not saying that at the moment, but it seems the signs are indicating that we have reached a predictable stage of the market. If all other economic factors are the same, we are assuming it will stay this way for the next three to six months.”

lbarnard@thenational.ae

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