Dubai’s residential sector encountered a comparatively strong second half of 2020, supported by the rise in completed property sales and carried rent demand across more-established villa communities, as per the leading international real estate services firm, Chestertons.
Villa sales costs noted a comparatively 3.6% downfall in 2020, with the overall yearly fall eased by a robust final quarter, Chestertons stated in its recent research.
The research, provided in the recent Observer: UAE 2020 Review & 2021 Outlook, provided that while the total value of residential property sales decreased by almost 14% over 2020, to AED55.46 billion from AED64.34 billion in 2019, completed property sales obtained step over the second half of last year, reaching AED21.67 billion, a 35.5% rise from AED 15.99 billion seen in H2 2019.
Apartment sales cost downfall was more pronounced, decreasing to 9.5% year-on-year, with ongoing unit completions continuing to place downward pressure on values, the statement explains.
In the rental sector, villa rents witnessed an annual decrease of 5.3%, while apartment rents decreased by 12.4%, it continued.
Chris Hobden, the Head of Strategic Consultancy, Chestertons Mena, said: “Dubai’s residential sector enjoyed a comparatively strong fourth quarter, with sales activity continuing to gain pace since mid-last last year. While residential rents continued to see steady falls, the pace of price declines eased in the final months of 2020, with the market-wide average bolstered by several villa communities seeing minor uplifts in achieved prices.“
“Overall, we expect to see modest declines in both average prices and rents this year, with ongoing unit completions likely to hamper performance. Price movements will increasingly vary by location and property type though, and we expect healthy demand for completed villas, across more-established residential areas, to continue into 2021,” he added.
As per the report provided by the real estate consultancy service JLL, only 150,000 square meters of the total leasable area was finished within the office market in 2020, showing a total of 67 percent loss from the average seen over the past three years.
Riyadh’s office market is predicted to handover almost 430,000 square meters of office space in 2021, with mainly Grate A quality units. While analyzing the past events, JLL said this amount was unlikely to emerge, with landowners reanalyzing market conditions and slowing down projects or putting them on hold.
“However, in the medium-to-long term, with employment figures expected to bounce back, corporates are likely to reemphasize the value-add of office spaces. We expect this will have a positive impact on quality office spaces,” the report predicted.
On a yearly basis, Chestertons provided the villas at Palm Jumeirah and the Meadows/The Springs witnessed the lowest price falls, with prices falling by just 2.1% and 2.7%, respectively.
Values across Jumeirah Park and The Lakes witnessed the highest yearly drop, from 5.2% and 4.9 respectively year-on-year, he said.
Chestertons said “in the apartment sales sector, prices continued to fall, although the rate of decline eased in Q4. The largest annual price declines were witnessed in Discovery Gardens, with prices falling by 13.5% annually to AED498 per sqft, from AED576 per sqft in Q4 2019”.
Dubai Sports City and Motor City also see comparatively rapid downfall Y-o-Y, decreasing by 13.3% and 12.8% respectively. Costs averaged AED600 per sqft in Dubai Sports City, with Motor City prices falling to AED10 per sqft, it continued.
Business Bay and Dubai Marina saw more moderate downfall over 2020, with prices decreasing by just 3.7% to AED973 per sqft, and 4.9% to AED980 per sqft. Respectively.
“With work-from-home policies continuing across parts of the private sector, and tenant demand for larger residential accommodation likely to remain strong, we expect villa rents to continue to outperform the wider residential average over the coming year,” said Hobden.
For apartments, downward pressure on rental rates continued because of the economic impact of Covid-19, causing a Y-o-Y decrease of 12.4%. The highest yearly decrease was witnessed in The Views and Discovery Gardens, at 16.3% and 16.2% respectively, with two-bedroom units inThe Views averaging AED100,000 over Q4.
In Dubai Motor City rates decrease by 15.9%, with three-bedroom apartments costing AED98,500, lower from an average of AED105,000 per annum in Q4 2019, said the expert.
Studio units witnessed the deepest fall over 2020, at 14.8%, then came one and two-bedroom units, which decreased by averages of 13.2% and 11.8%, respectively. Three-bedroom units downfall yearly by 9.2%, it added.
As per the theory of Chestertons, 2020 saw a remarkable downfall in the number of new off-plan sales launches, with developers mainly refraining from commencing new projects since Q1 2020.
The combined 6,115 residential units started building the previous year, in comparison to 18,650 in 2019 and 28,905 in 2018, it stated.
“We expect new off-plan sales launches to be limited in early 2021, with developers broadly reassessing project plans in the wake of an unprecedented 2020,” remarked Hobden.
“We predict, however, that new launch activity will pick up as the year progresses, with Expo 2020 set to provide a backdrop to showcase new projects,” he added.