x Abu Dhabi, UAEFriday 28 July 2017

Prices drop for first time on record

Property sale prices have softened month-on-month for the first time on record, but landlords thrive.

Developers are feeling the pinch but landlords are doing better.
Developers are feeling the pinch but landlords are doing better.

Property sale prices have softened month-on-month for the first time on record, falling by 4 per cent in Dubai and 5 per cent in Abu Dhabi, while rental yields have grown, according to an HSBC survey. "Despite market tightness, Abu Dhabi prices appear to be down due to its heavy off-plan weighting," analysts said in the bank's monthly secondary-market survey of the UAE. "Nonetheless, the only development that is ready, Raha Gardens, was down 2 per cent month-on-month."

In Dubai, the villas and flats markets saw different trends. According to the report, advertised villa prices fell by 19 per cent from September after several banks reduced mortgage loan-to-value ratios in August and September. But average apartment asking prices in Dubai were flat, which analysts attributed to an increase in sales at high-end projects. The HSBC survey also found that for the first time since the first quarter of last year, rental yields expanded last month due to lower asset prices and seemingly tight supply. "Month-on-month implied gross yields increased from 4.7 per cent to 6.3 per cent. However, rental demand is likely to remain robust as we sense potential buyers are deferring their plans until there is better visibility in the credit markets," the survey said. ngillet@thenational.ae