Jumeirah Beach Residence recorded the largest annual apartment rental declines in Dubai, according to a new report by Asteco.
Its UAE Real Estate Report Q1 2018 showed JBR rents slumped 15 percent compared to the year-earlier period, followed by Downtown Dubai, Dubai Marina and Deira (-14 percent), and The Greens and Dubai Sports City (-13 percent).
Asteco also said that villa locations that recorded highest drop in rental rates included Jumeirah Village (-15 percent), Jumeirah Park (-13 percent) and Arabian Ranches (-11 percent).
John Stevens, managing director of Asteco, said: “In 2018, we anticipate the delivery of approximately 30,000 residential units, however, as with Abu Dhabi, past evidence has shown that the actual completion rate is often significantly lower due to delays. Only 3,650 properties (12 percent) have so far been handed over in the first quarter of the year.”
Most of the recent inventory is concentrated in the new investment areas along the Sheikh Mohammed Bin Zayed Road (E311) and Emirates Road (E611) corridors. Among established communities, Dubai Marina also recorded additional supply with the completion of the first of three residential towers at The Residences at Marina Gate.
He said the emirate’s real estate market is becoming “increasingly fragmented”, resulting in a considerable widening of the rental rate ranges. Incentives such as multiple cheques, rent-free periods, and the absorption of utility, maintenance or agent fees are becoming the norm, he added.
Asteco said that while on the whole, the residential sector has witnessed only a minimal quarter-on-quarter decline at 1 percent, newly handed-over lower-end buildings in areas with significant supply potential have struggled with occupancy, particularly where rates and incentives were not aligned with the market.
Similarly, the average apartment and villa sales prices softened by around 1 percent in Q1, Asteco noted. While the annual decline for villas (6 percent) was less pronounced than for apartments (9 percent), particularly large villas with high price points generated limited interest, mainly due to the lower investment yields attached to this type of unit.
Stevens said: “We recorded a moderate increase in enquiries and transactions for high-end residential units, suggesting that albeit at a conservative level, there is still appetite for this product.”
Affordable housing options remained at the forefront of buyers’ interest, with the majority of banks and developers stipulating a minimum monthly salary of AED15,000 in order to purchase property in the emirate.
Stevens added: “Despite the boost in luxury project launches, we believe developers will continue to focus on affordable and mid-market housing because there remains a substantial supply gap. Other factors bolstering the trend include the growing young population and the rising popularity of home ownership.”
Source : Arabianbusiness