Dubai's off-plan and secondary markets recorded a positive start during the first quarter of 2019, but there have been minor declines in sales and rental prices compared to the previous quarter, according to the latest property market report by Bayut.com.
Dubai still remains a strong buyer's market. Apartment sales for studios, 1-bedroom, and 2-bedroom units witnessed price declines, with the most notable of the price changes for apartment sales seen in 1-bedroom units in Business Bay, where prices dropped 8.6percent to AED 1 million in the first quarter of 2019, compared to the previous quarter. The report also indicates that villa sales witnessed a decline due to the handover of more units, creating a larger portfolio of units with smaller square footage than what was available in the fourth quarter of 2018.
"The first quarter of 2019 appears to be continuing in the trajectory we observed in the last few months of 2018, with prices remaining largely unaffected in prominent areas such as Dubai Marina and Arabian Ranches, or reducing marginally," said Haider Ali Khan, CEO of Bayut.
Luxury retains its sparkle
Search trends show that interest remains high on luxury destinations such as Dubai Marina, Downtown Dubai, and Palm Jumeirah, all of which feature in the list of top 10 most popular areas with users. The upscale apartments in Marina Diamonds have an average ROI of 6.4 percent while Arabian Ranches takes the top spot for villa sales with an ROI of 5.8 percent, according to the Bayut.com report. The Al Reem sub-community is predictably the most popular with potential investors.
Dubai Marina also bounced back to the top position for apartment rentals in the first quarter of 2019, while Mirdif remains the most popular area for villa rentals.
"One of the new areas that we should be keeping an eye on, specifically from an investment perspective, would be DAMAC Hills. The villas in the community are attracting a significant amount of investor interest, and it’s easy to see the appeal. It’s fairly close to other successful villa projects including Mudon and Arabian Ranches, so there’s already an interest established in the area.In addition, the proximity to the Expo 2020 site, makes the area an attractive proposition for investors," Haider Ali Khan said.
Prices drop for sales and rentals
Average sales prices for studios and 2-bedroom units have also decreased marginally and now stand at AED 800,000 and AED 1.9 million respectively for this quarter. The sale prices for 3-bedroom villas here have dipped by a significant 7 percent over the last quarter, while 4 and 5-bedroom villas have experienced little to no change, standing at AED 3.8 million and AED 4.5 million respectively.
Rental prices of studios and 1-bedroom units in Dubai have remained steady at AED 55,000 and AED 80,000 respectively. However, 2-bedroom apartments have seen rentals fall by 4.2 percent, pushing prices down from AED 120,000 to AED115,000. For apartments, Deira has seen the most significant changes in rental prices in the first quarter, with prices for 2-bedroom units declining from AED 90,000 in Q4 2018 to AED 80,000 now. Regarding villa rentals, 4-bedroom units in Umm Suqeim have dropped by 7.5percent from AED 200,000 in Q4 2018 to AED 185,000.
“If we look at how the market is doing across the board, the overall trend is similar to what we observed in the first half of 2018. While prices on average have decreased for both properties on sale and rent, what is interesting to note is that in both sales and rental trends, we have seen very few areas with drastic decreases of over 10 percent," Haider Ali Khan said.
Bucking the trend
Affordable communities such as International City and Dubai Sports City have witnessed an uptick in sales prices for 2-bedroom units. Prices for these units in International City have risen from AED 690,000 to AED 700,000, while in Dubai Sports City, prices have jumped from AED 875,000 to AED 900,000. Interestingly, both areas also boast the highest ROI in Q1 2019 for apartments at 9.7 percent and 7.9 percent respectively.
Meanwhile, the sale prices for studio apartments in JBR have also climbed by 1.8 percent from AED 990,000 in Q4 2018. Sale prices of 2-bedroom apartments in Dubai Silicon Oasis have risen by 4.2 percent due to the addition of larger units in the market for this property type and recent handovers of completed projects.
"An interesting trend we noticed in 2018, which continues in this quarter is the growth in search volume for more affordable, well-integrated, suburban neighborhoods like Dubai Silicon Oasis, JVC and Dubai Sports City. These areas have incidentally shown a slight increase in prices but continue to remain popular because of their favorable reputation as well as high ROI. The move toward community-based living is also echoed in the city’s popular off-plan locations, which feature fully integrated projects like Akoya Oxygen and MBR City," Haider Ali Khan said.
The villa rental prices for 3-bedroom villas in the established area of Jumeirah have risen by 6.3 percent from AED 160,000 to AED 170,000 in Q1 2019, which could be attributed to an increased interest in family-friendly villas close to schools, hospitals, and other amenities.
Established areas like Jumeirah and Al Barsha have seen an uptick in rental prices for 3-bedroom units. Potential tenants will find that these units in Jumeirah have risen from AED 160,000 to AED 170,000, and in Al Barsha from AED 150,000 to AED 155,000.
Rental prices in the popular location of Arabian Ranches have remained stable for all units, experiencing no change over the last quarter.