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Second quarter sees steady decline in Dubai property values since last year's peak

UAE. The second quarter 2015 real estate report issued by leading local consulting firm ValuStrat – has shown a steady decline in property values since the peak last year. However, the rate of decline is easing and is expected to continue to decelerate over the remainder of the year.

The Residential VPI (ValuStrat Price Index), which is a 100 point index that started tracking residential values since January 2014 and tracks 26 key locations in Dubai, has shown a steady decline in property values compared to the second quarter of 2014.

April’s VPI registered 99.5 points, almost on par with January 2014, while May and June registered 98.9 and 98.4 points respectively.

Residential prices saw an11% annual decline, and are expected to continue to decelerate over the remainder of 2015.

When compared to the first quarter, apartments in Business Bay and International City witnessed an average value decline of 6% and 4%, respectively, additionally villas in Arabian Ranches, Jumeirah Park and Al Furjan, saw a 3% decline. 

The median value for apartments in June 2015 was AED 14,250 per sq m (AED 1,324 per sqft) and for villas was AED 14,725 per sq m (AED 1,368 per sqft).

On average, apartment asking rents dipped by 2% in comparison to the same period last year, and villa rents were down by 3%. However when comparing on a quarterly basis, apartment asking rents remained unchanged since the beginning of 2015. However, residential rents were more than 20% higher than the same period in 2013.

In terms of housing supply, Dubai’s residential market anticipates a total supply of 26,100 apartments and 2,400 villas in 2015, bringing the total number to around half a million housing units. 18 off plan projects were launched to add 5,000 units to the residential pipeline by 2019.

“… 5,400 residential units were completed during the first half of 2015, a further 28,500 units are scheduled to complete in 2016. This is taking into account a number of projects with approximately 3,000 units originally scheduled for handover this year, moving their schedule forward for completion during 2016…” added Haider Tuaima, ValuStrat Research Manager.

Office transaction prices dipped by a marginal 0.3% since last year and 1% since the first quarter. Having said that, office asking prices during Q2 are 43.8% higher than two years ago. Average office asking rents performance slowed to negative growth of 2.9% since Q1.

The median asking rent for office space is AED 1,184 per sq m (AED 110 per sqft), and DIFC saw the highest asking rents of AED 2,500 per sq m (AED 232 per sqft).

Downtown Dubai includes 15% of the total retail mall GLA in Dubai, this figure will grow due to expansion work for Dubai Mall and the announced extension within Emaar’s recently announced Downtown Views.

Nakheel launched an additional 71,000 sq m (766,000 sqft) of retail space at Ibn Battuta Mall’s new extension, Damac launched Vista Lux at Akoya Oxygen and Construction has begun on Gate Village Building 11 at DIFC, adding 3,700 sq m (40,000 sqft) of retail space.Prime line shop rentals averaged AED 6,700 per sq m (AED 622 per sqft).

The Dubai hospitality sector saw the total number of hotel rooms and hotel apartments at the beginning of Q2 2015 standing at 94,217. Twenty four new hotels were announced in Q2, adding 7,220 keys to the pipeline in the next 4 years. The average occupancy rate in Q2 was 75%, April and May saw occupancy rates of 81.7% and 80% respectively, while in June the occupancy rate fell to a record 63% due to Ramadan.

To see the report, please click here.

Photo Caption: Haider Tuaima, ValuStrat Research Manager.

About ValuStrat
ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Due Diligence and Divestment services across a diverse range of industry sectors since 1977. Offices in UAE, Saudi Arabia and Qatar serve over 750 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG.

About the ValuStrat Price Index
The ValuStrat Price Index (VPI) for Dubai’s residential sector is constructed to represent the monthly price change experienced by typical freehold residential units within Dubai. The VPI provides an up-to-date opinion of current pricing. The VPI is a comprehensive weighted sample of all property types across the city.

For more information please visit www.valustrat.com

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