Dubai, United Arab Emirates – 16 January 2010: Landmark Advisory, one of the leading real estate consultancy companies in the Middle East, today released its January Dubai sales guide for Dubai which indicates that sale prices are likely to continue declining in the first quarter of 2011, particularly for medium and low quality units, due to the ongoing demand for high quality.
According to Ms. Jesse Downs, Director of Research & Advisory Services, Landmark Advisory, “there is a high degree of oversupply already prevalent in the Dubai Market, and with a considerable amount of new supply due to come online shortly, this will only have an adverse affect, putting downward pressure on sale prices.”
In line with previous sales guides, Landmark Advisory’s latest report has identified a significant price bifurcation based on quality, particularly in relation to the apartment segment of the market: “Although we have not seen as steep a decline in sales prices as we have with lease prices, there have still been significant reductions and, what is more, this has happened ubiquitously throughout Dubai,” explained Ms. Downs.
Findings since August 2010 indicate that poor quality units have been the worst performing asset: “While price declines have also affected more attractive, better quality units, it is certainly not to the same extent,” said Ms. Downs. “For instance, during Q410 prices for lower quality units in Dubai Marina fell up to 10%, whereas higher quality units in the same area saw little or no decline.”
According to the latest Dubai guide, sale-change patterns in Q410 differed between villas and apartments. “Villa sale price performance was a function of location, with declines much more significant in Central Dubai, where, for instance, prices in The Springs and The Meadows fell by over 12%,” said Ms. Downs. “However, in other areas of Dubai there was little change. For example, four and five bedroom units in Victory Heights actually increased in price due to less supply available on the market. However, the majority of these prices drops occurred in Q3, with Q4 itself being reasonably stable.”
Apartment prices fell more consistently across Dubai, with quality seemingly the defining factor: “Apartments are more susceptible to price declines dependent on quality, with greater supply leading to greater choice for prospective buyers. This is further exacerbated by that fact that there are considerably more apartments than villas coming online in the near future, increasing the already existing oversupply and continuing to bring prices down.” continued Ms. Downs.
Turning to the commercial sector, most demand continues to focus on renting, with few transactions occurring for sales. However, Landmark noticed some significant declines in prices, most notably in JLT due to the new supply recently delivered there. Standard quality office space dropped as much as 30% in some cases, with good quality space down as much as 15%.
Ms Downs concluded that “while we are no longer seeing the same sorts of declines in sales prices that initially occurred post 2008, this is not to say that the market has fully bottomed out yet. It is our belief that prices will continue to fall for a while. However, the relatively shallow declines seen in the last quarter represent something of a boost for the property market in the Emirate.”
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