Prime Dubai property sees drop in sales volume

(MENAFN- Khaleej Times) The Dubai property market is facing a number of deflationary pressures such as a consolidating jobs market, a strengthened dollar and an uncertainty in oil prices. The onset of Ramadan coupled with summer is expected to drop transaction activity levels further and extend this downward trend through the third quarter.

With the strong dollar making Dubai property expensive for holders of other currencies, it seems even deep-pocketed buyers are non-committal on prime real estate purchases.

This could explain why transaction activity has dropped significantly on prime properties in upmarket areas in Dubai such as the Palm Jumeirah, Al Barari, Dubai Marina and Downtown Dubai. Emirates Hills, however, has bucked this trend.

According to Core, the UAE associate of Savills, transaction activity on Palm Jumeirah villas dipped 25 per cent over the last 12 months, while prime villas (over Dh10 million) fell by 44 per cent year on year.

Sales prices per sq ft for villas on the Palm remain steady with a four per cent year-on-year drop. The area''s rental market saw a seven per cent year-on-year drop.

David Godchaux, CEO of Core, says: "With a total stock of 1,700 villas, an estimated 150 to 200 villas are currently available for sale on the Palm Jumeirah. More units are anticipated to be held by investors as many are not pressed financially to sell in this bottoming market, while a few others look towards commanding premiums by refurbishing existing units and attracting buyers who are seeking contemporary products."

Overall sales transaction activity in Dubai Marina dropped 25 per cent, while the prime apartment sales volume saw a fall of 43 per cent year on year.

"However, Dubai Marina witnessed the highest transaction activity in the apartment segment over the last few years. Headline occupancy levels are nearly 90 per cent in top-performing towers and the prime rental market has remained relatively steady due to the continued demand from expats. Nonetheless, prime sale prices have dropped eight per cent year on year," says Godchaux.

At 40 per cent, Emirates Hills witnessed the highest transaction volume among all prime villa districts in the last four quarters. Villa properties above Dh10 million in Emirates Hills experienced approximately 45 per cent higher year-on-year transactional activity in the same time period.

Godchaux says: "With limited stock and no new supply of this scale and quality and close proximity to other prime residential and economic clusters, Emirates Hills continues to be the most sought-after ultra-prime residential address in Dubai for international buyers."

There was no such good news for the sales market at Al Barari, which saw a 10 per cent year-on-year drop, while the volume of prime sales in Downtown fell by 12 per cent.

Godchaux adds: "In Downtown, the softened sales market is pushing financially sound investors to take a long-term approach by holding onto properties and leasing prime assets as the rental market continues to be strong. The ongoing uncertain macroeconomic backdrop has also slowed end-user buyer interest. These factors have pulled overall transaction levels down by 19 per cent in Downtown.

"However, the district maintains its high headline occupancies, currently ranging over 85 per cent across most of the prime towers. The Downtown rental market has shown a two per cent year-on-year increase, bucking apprehensions of a weakening rental demand due to a consolidating financial jobs market."

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