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Apartment rents, sales prices drop in these areas

* Average apartment fell 1 per cent in Q4; 3 per cent throughout the year

* Villa sales prices dropped by 2 per cent in Q4; 6 per cent throughout the year

* Apartment and villa rents fell by 2 per cent in Q4

In the fourth quarter of 2016 the trend was that more tenants were willing to buy properties in the emirate in the fourth quarter.

The fourth quarter of 2016 saw an increase in sales of residential properties in Dubai on the back of falling sales prices. Rents of apartments and villas in the emirates also dropped in most of the popular areas pushing residential real estate transaction volumes 30 per cent up compared to Q4 2015.

Here are the latest figures from leading property consultant Chestertons MENA which show where sales prices and rents of apartment and villas dropped in the three months ending December 31 last year.

Where apartment prices went down

Sales prices fell marginally across the board by 1 per cent on average in Q4, while year-on-year there was an average decline of up to 3 per cent.

“The average drop in sales prices in areas such as Dubai Marina, Emirates Living and Jumeirah Lake Towers (JLT) have made these locations more attractive to potential homeowners who may have previously been tenants,” according to Robin Teh, Country Manager – UAE & Valuations & Advisory Director, MENA.

The worst performing area was Dubailand, where the average sale price for apartments fell by as much as 4 per cent in Q4 compared to the previous quarter, and 9 per cent overall for the year. Average apartment prices in JVC and Remraam saw no change over the quarter and a minimal 1 per cent drop throughout the year.

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Where villa prices fell

Villa sales prices decreased by an average of 2 per cent in the fourth quarter and 6 per cent overall for the year. Villas in Al Furjan saw a marginal drop from the previous quarter, but recorded a marked 9 per cent fall in prices through 2016; while prices in Jumeirah Park declined by 5 per cent from Q3 and 7 per cent year-on-year.

The price of villas in The Lakes and Arabian Ranches fell 2 per cent over the quarter and 6 per cent overall for the year.

Only villas on Palm Jumeirah showed any signs of price increase (1 per cent) from Q3 to Q4, while remaining stable for the year.

“Real estate prices dropped at a slower rate during 2016 as the ripple effect of global and economic uncertainty continued to impact the market in Dubai. We expect this to continue into the first half of 2017 and prices to remain flat,” says Teh.

Where rents of properties declined

On average, there was a 2 per cent drop in apartment rents across all areas and a 3 per cent decline year-on-year. However, apartments in JLT and Business Bay fell by 8 over the course of the year and DIFC by 7 per cent over the same period.

Only Downtown Dubai held its rental rates from 2015.

Average villa rents in the emirate also fell 2 per cent from Q3 and 5 per cent annually. JVT, Al Furjan and Arabian Ranches all saw a 5 per cent drop in rents in Q4 compared to the third quarter, with JVT experiencing a 10 per cent fall overall year-on-year. Rents in Jumeirah Golf Estates dropped 9 per cent over the year.

Despite experiencing a marginal 1 per cent drop in rents from Q3 to Q4, Palm Jumeirah was the only area to witness an overall increase in rental rates (1 per cent).

“Demand remains relatively stable in the rental market, with tenants having more options of locations as rents dropped in 2016,” says Teh.

“We expect the downward pressure on rents to remain throughout the first quarter of 2017 with prevalent private and government cost-cutting measures prevailing along with employment instability in the labour market,” adds Teh.