A new report has found that prices for apartments, villas and commercial properties in Dubai remained stable in the second quarter of this year, compared to the previous three months. However, rents in the emirate continue to fall due to oversupply in the market.
The Asteco Q2 2010 Report said that no change was recorded in the sales price of apartments and offices, with flats in Dubai International Financial Centre (DIFC) and on Palm Jumeirah still commanding the highest prices.
'The market is, however, at a stage where pricing can vary from unit to unit in any particular property. We have noticed some overseas clients, who bought property on Palm Jumeirah, are prepared to sell at a much lower price per square foot as the exchange rate is more favourable without them incurring any discount," said Elaine Jones, CEO, Asteco Property Management.
Meanwhile, sale prices for villas in the emirate were unchanged compared with the first quarter in all areas except The Meadows and The Springs, where prices declined 5% and 6% respectively. The declines in these two developments were mainly due to the large number of units available in the area, their age and the fact that owners who initially bought into this development at low launch prices are in the position to reduce their asking price without making a loss, the report said.
Villas on Palm Jumeirah remain the most expensive in the emirate at Dhs1,800 per square foot, while villas in the Green Community are at the opposite end of the scale selling for Dhs700 per square foot.
Dubai rental prices dip
On the rental side, an increase in the number of flats coming online in Dubai over the second quarter squeezed apartment prices down 8%, providing tenants with the opportunity to move to better locations or larger properties, the report said.
Dubai Marina proved particularly popular with people previously living in Jumeirah Lakes Towers (JLT). This movement then had a knock-on effect down the price chain as those in Discovery Gardens upgraded to JLT and people in International City looked for flats in Discovery Gardens.
'Although relocation trends from Abu Dhabi and Northern Emirates have slowed due to price correction in those markets, internal movement in Dubai is at its peak with tenants looking for upgrades in terms of quality, size or location. But there is an exceptionally broad range of prices, depending on the motivation of the landlord. As a consequence the rental market, especially for apartments, is very active,' Jones said.
Rental prices for villas fared better with reductions of just 4% on average across Dubai despite also seeing an increase in supply. Villas in Jumeirah proved the most resistant, seeing falls of just 1%, the report noted.
"The handover of developments such as Layan in Dubailand, the Cedre Villas in Dubai Silicon Oasis and the Shorooq Villas in Mirdiff inevitably put pressure on rents. Although these projects have limited infrastructure, facilities and landscaping, these properties attracted some people to move to take advantage of cheaper rents and larger unit sizes despite the lack of infrastructure," said the report.
On the commercial front, rents still show a downward trend, while sales activity was stable. JLT outshone all other areas with the development accounting for half of all transactions, the report said.