Two new reports confirmed prices decline in the Dubai property market

Second quarter reports by JLL and Cavendish and Maxwell determined lead indicators of housing prices decline in Dubai and analyzed its cause and effect.

Apartments prices in Dubai sales segment decreased by 1% in the second quarter according to JLL and by 2% according to Cavendish and Maxwell.

Villas sales prices decreased by 2-2.4% in the same period according to both agencies accordingly. Thus, residential property prices in Dubai in the second quarter slowed their decline compared to the first quarter of the year, and for the future both agencies predict a minimal price reduction, without any sharp downs.

“The extent of the compression will be better established throughout the third quarter and leading up to Cityscape Dubai where the activity at and preceding the event is typically a good gauge of market sentiment,” said the Cavendish and Maxwell report.

With regard to the rate of prices decline and customer activity decrease by districts, such locations as Dubai Marina, Jumeirah Beach Residences (JBR) and Dubai Sports City managed to hold the prices better than Motor City and Discovery Gardens: in the first case the decline in prices was 1% and in the second - 3% on average, respectively. And such new, actively developed areas as Dubai World Central (DWC), Dubailand, and Mohammed Bin Rashid City (MBR City) predictably demonstrated the advantage of off-plan real estate over the ready housing.

The fact that prices have fallen, and the number of transactions in residential real estate segment dropped by two-thirds compared with the first half of 2014, is regarded by the analysts of both agencies as quite natural, since in the first half of last year property in the primary and secondary markets was overestimated at the background of mostly speculative activity boom.

“Buyers seem to be in a ‘wait and see’ period following the decline in prices in Q1 and Q2 of 2015,” Cavendish and Maxwell said.

“These figures come as no surprise given Dubai’s residential market was booming over the first half of 2014, and units in the primary and secondary market were overpriced,” JLL said.

“These levels of decline in transaction activity have resulted in a single digit decline in sale prices, contrary to the major declines seen in 2008/2009, reflecting signs that Dubai’s market is maturing.”

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