Even With a Rise in Buyers, Sales Prices Fall Further in Dubai
A boom in new construction is responsible for the years long slowdown in home values
A boom in new home construction in Dubai continued to water down home values across the Middle Eastern financial capital in the third quarter of 2019 even as more buyers entered the market, new data shows.
The average sale price of a single-family home in Dubai, referred to locally as a villa, fell 15% in the third quarter compared to a year ago, according to a report on Wednesday from property consultants Cavendish Maxwell. Prices softened even more for apartments, where the average price declined 16.5% during the same time frame.
A flurry of new builds have hit the market in anticipation of Dubai 2020, a world’s fair planned to launch a year from now. Developers, facing fierce competition, have turned to attractive payment plans and pricing that has forced home prices down across the emirate, according to commentary from Cavendish Maxwell.
The obvious upside is that home ownership has become far more attainable than it was five years ago as declining home values and new avenues for long-term residency have helped spur more home sales.
“A prolonged softening in prices and rents has made real estate more accessible to and affordable for owner-occupiers and tenants,” said Aditi Hariharan, a senior consultant at the firm. Sales have also surged on the news that the Dubai government would form a real estate committee aimed at re balancing supply and demand.
“The positive impact of the move is already evident with real estate transactions in Dubai more than doubling since the announcement of the committee,” Ms. Harridan added.
Total residential sales between July and September clocked in at 9,243, a surge of more than 45% compared to the same period last year, according to a separate report from property agents Luxhabitat on Wednesday.
Mohammed Bin Rashid City, where the average apartment trades for around AED 1,200 (US$327) per square foot, saw a particularly strong third quarter. Across Dubai Creek from Downtown Dubai, the neighborhood accounted for over AED 2 billion in sales in the third quarter. It also logged the highest single deal: A sumptuous villa in the neighborhood's District One development that sold for AED 90 million.
The second most expensive deal in the second quarter was a AED 74 million penthouse at One Palm, a luxury high-rise on the Palm Jumeirah, according to Luxhabitat.
