Business Bay (-9%) and Dubai Silicon Oasis (-9%) in terms of apartments and Palm Jumeirah (-8%) and the Meadows and the
C H E S T E R T O N S
M E N A
OBSERVER Q 1 2 0 18
DUBAI RESIDENTIAL MARKET OVERVIEW
Q1 2018 R
E
P
O
R
T
D
U
B A
I
R
E
S
I
D
E
N
T
I
A
L
1
Q 1 2 0 18
Report Highlights Prices: Q1 witnessed continuing corrections in sales prices with apartment and villa prices falling by 5% on average representing the highest quarterly decline in apartment sales prices since 2014. The communities with the highest declines were Business Bay (-9%) and Dubai Silicon Oasis (-9%) in terms of apartments and Palm Jumeirah (-8%) and the Meadows and the Springs (-8%) in terms of villas. The number of new launches declined during the quarter with the majority of developers aiming to deliver the current pipeline before 2020.
Chestertons MENA Services Valuations Mortgage and Secured Lending Portfolio Valuations
Advisory and Research Financial Feasibilities Highest and Best Use Studies Market Research Conceptual Advisory and Project Positioning Studies Project Redevelopment/Repositioning Advisory Investment Strategies – Acquisition and Disposal
2017 while transaction values decreased by 16%. The number of completed unit transactions increased by 10% from the previous quarter reflecting only a 2% increase in transaction value, indicating a decline in average ticket sizes. Dubai Marina continued to be the most popular community in terms of completed unit transaction volumes and values while Business Bay dominated the off-plan sales market. Outlook: With substantial pipeline stock due to be released to the market, the moderate economy and population growth rate, further declines in sales and rental values are expected. In addition, Off-plan sales transactions are expected to decline further, with completed unit transactions being driven by end-users rather than investors due to shrinking rental yields.
Rents: Rental rates for both apartments and villas fell by 2%, highlighted by a 4% decline in the Greens (apartments) and Palm Jumeirah (villas). The scale of the decline was evenly spread across different unit types, as opposed to the previous quarters where the larger units were more severely affected.
Sales and Leasing Commercial Industrial Residential Retail
Transactions: Chestertons’ Q4 2017 Observer predictions have been proven to be accurate. Overall, the volume of transactions fell by 10%, while values also fell by 9%. The declining demand for off-plan properties continued as the number of transactions decreased by 19% compared to Q4
Property/Facilities Management Commercial Mixed-Use Residential
Residential Market – Q1 2018
International Properties
Price Movements QoQ
London Off-Plan Residential International Homes and Investments International Relocations
Rental Movements QoQ
Ready Units Transactions
Off-Plan Units Transactions
-5%
-2%
10%
-19%
-5%
-2%
2%
-16%
Apartments
Villas
Apartments
Volumes
Villas
Volumes
Values
Values
Source: Chestertons Analysis and REIDIN
2
C
H
E
S
T
E
R T O
N
S
M
E
N
A
O
B
S
E
R V
E
R
D
U
B A
I
R
E
S
I
D
E
N
T
I
A
L
3
Q 1 2 0 18
R E S I DE N T I A L
Sales Prices & Quarterly Change A PA RTM E N T S Q1 2018
1,683
-6%
1,386
1,441
1,095
1,192 824
894
1,110
1,163
-5%
631
653
957
1,046
729
897
807
831
757
764
-4%
1,320
1,371
-3%
792
850
-1% -2%
1,178
1,288
QoQ Movement
-7%
PERCENTAGE CHANGE
AED SALES PRICES
1,728
Q4 2017
-8% -9% -10%
Business Bay
Discovery Gardens
Downtown
Dubai Land
Dubai Marina
Dubai Motor City
Dubai Silicon Oasis
Dubai Sports City
International City
JLT
JVC
The Greens
The Views
Figures in AED/Sq Ft
Source: Chestertons Analysis
VILLAS Q4 2017
Market Commentary
QoQ Movement
Q1 2018
0%
-5%
1,069 988
Jumeirah Park
-4%
1,279 1,204
994 985
2,398 2,205 971 942
AED SALES PRICES
Arabian Ranches
-3%
-6% -7%
PERCENTAGE CHANGE
-1% -2%
-8% -9%
Palm Jumeriah
The Lakes
The Meadows/ The springs
Figures in AED/Sq Ft
4
Apartment and villa sales prices in Dubai have weakened by 5% during the first quarter of 2018. Moderate population growth coupled with the excess supply of residential stock brought further pressure on the prices. As a result of the sales price decline, many end-users have decided to benefit from the current affordability and as a result the number of completed unit transactions increased by 10% compared to the previous quarter. Off-plan transactions, while still dominating the market, have achieved a 19% decline in volumes. The most popular areas in terms of completed unit transactions volumes were Dubai Marina, Dubai Sports City and International City whereas the majority of off-plan units that transacted are being built in
Business Bay, Meydan City and Jumeirah Village Circle. Apartments in Business Bay and Silicon Oasis saw the steepest downwards correction at 9%, with Dubai Land being the most resilient community witnessing a drop of only 1%. Villas in Palm Jumeirah and the Meadows and Springs saw capital depreciation of 8%, while Jumeirah Park villas recorded the lowest decline of only 1%. Off-plan transactions declined by 10% in Q1 2018 compared to Q4 2017. The favourable payment plans offered by developers continued to be the preferred method of “financing”, however, the competitive banking sector has also introduced a range of innovative lending schemes which, coupled with the decline in sales prices of completed units has increased the number of completed unit transactions.
Source: Chestertons Analysis
C
H
E
S
T
E
R T O
N
S
M
E
N
A
O
B
S
E
R V
E
R
D
U
B A
I
R
E
S
I
D
E
N
T
I
A
L
5
Q 1 2 0 18
R E S I DE N T I A L
Market Rent & Quarterly Change A PA RTM E N T S Studio
1BR
2BR
3BR
QoQ Change
1%
250,000
1% 0% -1% -1%
150,000
-2% -2%
100,000
-3%
PERCENTAGE CHANGE
AED RENTAL
200,000
-3%
50,000
-4% 0
-4% Business Bay
DIFC
Discovery Gardens
Downtown Dubai
Dubai Marina
Dubai Silicon Oasis
Dubai Sports City
Dubailand
International City
JLT
JVC
The Greens
The Views
Dubai Motor City Source: Chestertons Analysis
VILLAS 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0
3BR
4BR
Market Commentary
AVG
5BR
2% 1% 0% -1% -2% -3% Arabian Ranches
The Springs
The Meadows
The Lakes
Victory Heights
Al Furjan
JVT
Jumeirah Jumeirah Island Golf Estates
Palm Jumeirah
-4%
PERCENTAGE CHANGE
AED RENTAL
2BR
Rents for apartment and villas reported a 2% drop. The additional stock that was delivered over the previous quarter and a number of expatriates becoming homeowners had an adverse impact on the rental values. The highest decline in apartment rental values was recorded in the Greens (-4%), followed by Business Bay, International City, Jumeirah Village Circle and Motor City all of which declined by 3%. The communities resilient to the trend which maintained rental levels from the previous quarter were DIFC, Dubai Marina and Dubai Silicon Oasis. Villa rents saw the highest decline in Palm Jumeirah (-4%), followed by a 3% decline in Arabian Ranches and
Victory Heights. Jumeirah Golf Estates was the only community where no villa rental drops were recorded. The pace of villa supply delivery is expected to be faster than the demand increase; hence further villa rental softening is expected over the upcoming quarters.
Source: Chestertons Analysis
6
C
H
E
S
T
E
R T O
N
S
M
E
N
A
O
B
S
E
R V
E
R
D
U
B A
I
R
E
S
I
D
E
N
T
I
A
L
7
Q 1 2 0 18
R E S I DE N T I A L
Sales Transactions Volume of Residential Property Transactions Q1 2018 Ready Properties
Value of Residential Transactions Q1 2018
Off-plan
7,000 6,000
5,754
5,000
AED
AED
4,000 3,000
Off-plan
BILLION
6.03
3,121
2,839
Ready Properties
4.72
4,642
BILLION
2,000 1,000 Q4 2017
Q1 2018 Source: Chestertons Analysis and REIDIN
8
C
H
E
S
T
E
R T O
N
S
M
E
N
A
O
B
S
E
R V
E
R
Source: Chestertons Analysis and REIDIN
D
U
B A
I
R
E
S
I
D
E
N
T
I
A
L
9
Q 1 2 0 18
R E S I DE N T I A L
Sales Transactions COMPLETED UNITS
OFF - PLAN UNITS
Top 10 areas based on transaction volumes
Top 10 areas based on transaction volumes
Dubai Marina
Business Bay
Dubai Sports City
Meydan City
International City
Jumeirah Village Circle
Emirates Living
Dubailand
Downtown Dubai
Al Furjan
Jumeirah Lakes Towers
Dubai Marina
Palm Jumeirah
Zabeel
Dubailand
The Lagoons
Barsha Heights
Dubai South
Jumeirah Village Circle
MBR City
100
-
200
300
400
500
100
0
200
300
400
500
600
Source: Chestertons Analysis and REIDIN
Top 10 areas based on transaction values (in million AED)
700
800
Source: Chestertons Analysis and REIDIN
Top 10 areas based on transaction values (in million AED)
Dubai Marina Emirates Living
Dubai Marina
Palm Jumeirah Dubai Sports City
The Lagoons
Downtown Dubai Arabian Ranches
Jumeirah Village Circle
Jumeirah Dubai Land
Jumeirah Lake Towers Barsha Heights Al Furjan
Palm Jumeirah
-
100
200
300
400
500
600
700
800
900
0
100
200
300
400
500
600
Source: Chestertons Analysis and REIDIN
10
C
H
E
S
T
E
R T O
N
S
M
E
N
A
O
B
S
E
R V
E
R
700
800
900
Source: Chestertons Analysis and REIDIN
D
U
B A
I
R
E
S
I
D
E
N
T
I
A
L
11
OBSERVER
Contact Us
MENA HEAD OFFICE 1802, Blvd. Plaza Tower 1 Sheikh Mohammed Bin Rashid Blvd. Downtown Dubai, P.O. Box 283361 Dubai, United Arab Emirates
Nick Witty, BSc (Hons) MRICS Managing Director-MENA
Office Fax Email
[email protected]
Adam Wilson BSc (Hons) MRICS ACIArb Director, Head of International Valuations
· +9714 381 0200 · +9714 325 3359 ·
[email protected]
[email protected]
DUBAI OFFICE
Vladimir Cvetinovic, MRICS
106, Rasis Business Center Al Barsha 1, PO Box 283361 Dubai, United Arab Emirates
Associate Director, Valuations & Advisory-AUH
Office Email
[email protected]
· +9714 392 7818 ·
[email protected]
Ivana Gazivoda Vucinic
Head of Consulting Head of Valuation & Advisory Operations
ABU DHABI OFFICE
Ellen Sleutjes
Office Fax Email
Office M01, Mezzanine Floor, Al Ghazal Building Khalifa Park, P.O Box 128983 Abu Dhabi, United Arab Emirates
[email protected]
Head of Property Management-UAE
[email protected]
· +9712 447 3100 · +9712 441 6200 ·
[email protected]
Disclaimer: All articles and data presented herein is intended for information purposes and has been compiled from sources deemed reliable including the Valuations and Research Department of Chestertons, sales and leasing staff, published data, and secondary sources. Though information is believed to be correct, materials presented is subject to errors, omissions, changes, or withdrawal without notice.
12
w w w. c h e s t e r t o n s - n e w s . c o m C
H
E
S
T
E
R T O
N
S
M
E
N
A
O
B
S
E
R V
E
R
