Dubai Market Watch Q2-Q3 2014

www.roostland.com | Dubai Real Estate Broker – Roots Land Real Estate

Dubai Market Watch

Q2-Q3 2014


Dubai Market Watch Q2-Q3 2014

The ou t ’s fu da e tals ha e sta ed st o g this ua te ; ith the UAE Depa t e t of

Economic Development predicting economic growth of 4.7% this year, which is being heavily

driven by the tourism, trade, transportation and the real estate sectors. Dubai property market

showed positive performance in the second and third quarters of the year with slight sale and

rent increases in the majority of the districts across the city.

See also: UAE Real Estate Analysis - Q1 2014

Ho e e the i pa t of the Du ai Go e e t’s ool do easu es, i t odu ed du i g the

last quarter of 2013, as well as the doubling of property registration fees to 4% and the new

o tgage ap, o i ed ith the aste de elope s’ st o ge e ui e e ts fo off-plan

project buyers, have reflected positively on the real estate market with a slowdown in the sales

volumes and in growing rates.

Sales transaction volumes recorded by the Dubai Land Department were marked by the usual

Dubai market summer slowdown. With residents making the most of the holiday season to

travel outside the country, residential transactions declined by approximately 36% q-o-q.

Additionally, a majority of investors sought off-plan properties rather than completed projects,

which reflects in sale transaction volumes. However, the opposite trend is observed for the

end-users who prefer ready properties. This slowdown is a result of a moving market that

motivates buyers to wait and see how it will perform in the near future; in the meantime the

stock market is an attractive alternative to the real estate market giving investors more liquidity

and promising higher returns.

http://www.rootsland.com/property-watch/analysis/dubai-market-overview/q1-2014


It nevertheless provides a great opportunity for buyers to invest in properties as lower demand

allows for more negotiation. This is reflected in the price stabilisation witnessed this quarter;

indeed, the majority of the communities show prices rising at a slower pace, or in some cases,

have even started to reduce in communities such as Business Bay or Dubai Marina, with y-o-y

prices increasing by 25% on average in all monitored areas.

As for the rental market our analysis shows that the most searched for communities were

Downtown Dubai, JLT and Dubai Marina; these areas are the most desired ones for new

expatriates settling down in Dubai. During the second and third quarters rents stabilised in

most of the communities, year-on-year however rents increased significantly across the city.

Despite this recent stabilisation we noticed residents tend to move out of these areas rather

than move in; seeking more sustainable rents, they relocate to more affordable districts such as

Jumeirah Village, Dubailand, Sports City or Motor City.


Alternatively, residents are shifting to the Northern Emirates; Sharjah being constantly

congested and with fast growing rents, this is motivating Dubai residents to look for farer

Emirates (Ajman and Ras Al Khaimah), which offer cheaper rents and are easily accessible via

Sheikh Mohammed Bin Rashid Road and Emirates Road.

In the current prime residential market Dubai Marina and Downtown Dubai are the most

sought-after communities for investors and end-users.

Du ai Ma i a’s att a ti e ess e ai s high tha ks to the i u e a le possi ilities the

community offers to its residents; the Marina Walk provides numerous restaurants and cafes,

while the proximity to the beach, to Sheikh Zayed Road and to public transport including the

up o i g t a , hi h is due fo o pletio at the e d of the ea , ake it o e of Du ai’s ost

bustling area. However the community shows slowdown in the sale transaction volume;

residential sale prices stabilised in the second quarter and started declining this quarter.


Jumeirah Beach Residence (JBR) witnessed the highest percentage of changes in the last two

quarters with a drop in residential sales transactions of approximately 50% as recorded by

Dubai Land Department. However, the sale rates increased by 8% during the second quarter

but stabilised during the third quarter. Construction work of the tram in JBR and Dubai Marina

have created major traffic congestion over the past few months; nevertheless JBR remains one

of Du ai’s ost popula dist i ts att a ti g tou ists as ell as eside ts all ea lo g o its

famous Walk, its new Beachfront Mall and its numerous private and public beaches, offer good

value and we expect the demand to rise with the cooler weather and the completion of

construction work.

Do to Du ai’s sale ates i eased % i the se o d ua te a d sta ilised i the thi d

one. The attractiveness of this community stays high as it offers perfect balance between

business and leisure to its residents, in its diverse restaurant, cafe and retail offering. With

plans to expand them with the Dubai Mall Extension and the completion of several projects in

the district. However we noticed a drop in residential sales volumes in the last two quarters, of

45% and 60% respectively, which we assume is due in particular to the off-plan projects

recently launched in the district, master developer Emaar launched three projects in Downtown

Dubai during the past five months: Opera Grand, BLVD Crescent Tower II and BLVD Heights.


Developers offer attractive payment schemes for off-plan projects luring investors and end-

users in spite of the recent increases in down payment requirements and the introduction of a

ban on off-plan property resale implemented by master developers in the late 2013.

The volume of sales transactions declined on Palm Jumeirah this summer; while on the other

hand the average sale rate increased during the second quarter by 12% but declined this last

quarter by 5%.

In these communities our analysis shows rents stabilised in the past few months.


In this quarter the top villa communities are The Springs and The Meadows, Arabian Ranches

and Jumeirah Park with over 75% of the overall volume of sale transactions recorded in these

areas. The summer season was quiet again this year in the villa market with a lower number of

sales transactions overall in the areas we monitor. Moreover several villa projects were

launched by developers in the last two quarters, thus expanding the off-plan market, which

explains the decline in registered sales with the Dubai Land Department. However the number

of properties these projects will bring to the market is relatively low in comparison with the

expected demand; nearly 3,000 villas were launched for sale in the last six months including

three projects in Arabian Ranches (Aseel, Mira Oasis and Samara Villas) and two in Dubailand

(Fendi and Mudon Villas).


The average sale price recorded rose during the second quarter in the high-end segment, this

quarter on the other hand a decline was recorded in the same communities except in Arabian

Ranches. This luxurious and peaceful community offers state-of-the-art facilities, built around

the Arabian Ranches Golf Club, conveniently located in the heart of the desert along Sheikh

Mohammed Bin Zayed Road, which allows residents to have easy access to Dubai, Jebel Ali and

A u Dha i, a d a oidi g t affi o gestio . Additio all the o u it ’s de elop e t of

i f ast u tu e a d se i es keep i esto s’ a d e d-use s’ i te est up.

Emirates Hills has shown a high increase in the average sale rate in the second quarter that

corrected itself during the third quarter; however this sudden increase should be treated with

caution, as the volume of transactions that quarter was low.

Pal Ju ei ah’s outsta di g ea hf o t ie s, pea eful ess a d ela i g e i o e t, i a

chic and exclusive atmosphere along with the on-going residential and hospitality projects on

the isla d a d the up o i g de elop e t of Nakheel Mall is keepi g u e s’ interest high. The

community is the second villa district in which sale transaction volume increased during the

second quarter (after Arabian Ranches): however with summer season the activity slowed

down in the third quarter, while sale rates declined by 13% q-o-q.

In the mid-end segment average sale rates stabilised this quarter in most of the communities;

the villa rental market follows the same trend.

A brand new villa district, Jumeirah Park showed stable sale rates decline in the volume of sales.

The o u it ’s u e t a se e of fa ilities as ell as the o -going infrastructure work can

explain this stabilisation.


Tu i g to suppl , e’ e oti ed that o e the past 4 o ths a ajo it of the p oje ts

launched by developers were luxurious products desti ed fo the a ket’s highe -end. Despite

the importance of the mid-segment, forming a major chunk of the working population of Dubai,

it is largely ignored in the current real estate perspective. The services sector, mainly the

hospitality and retail segments, are likely to attract a work force which is expected to fall in this

segment with monthly salary brackets of AED 15,000 to 25,000. Although recent regulations

implemented by Dubai Government have to an extent helped in controlling speculator activity,

we realise by looking at property advertisements that it can be stated that speculation still

prevails in the market. A focus from developers on this segment of the population would

increase end-user buyers and, to an extent, help in weeding out speculators.

For more information about Dubai property market please contact Roots Land Real Estate at 04

329 8333 or email [email protected]

mailto:[email protected]?subject=Dubai%20Property%20Market

Documents

Dubai Market Watch Q2-Q3 2014