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Landlords Encouraged To Focus On Quality As Rents Continue To Fall

Rents continued to drop in Dubai in Q2, while sale prices of apartments and villas remained largely flat.

Average rental rates for apartments and villas fell 4% and 2% respectively quarter on quarter.

The average selling price of an apartment was down 1% quarter on quarter, while the average price of a villa remained the same across Dubai.

Chestertons, which revealed the figures in its quarterly Observer report, said that landlords seeking to shore up yields should focus on quality.

“The average decline in rental rates can be attributed to several factors, including greater choices at reduced prices,” said Ivana Gazivoda Vucinic, head of consulting and valuations and advisory operations, Chestertons MENA.

“The focus for developers and landlords going forward should be on quality, as tenants proactively seek out cheaper options or move to better quality units for the same price as their existing units.”

In terms of apartment sales values, Business Bay saw a 4% jump in prices following a 9% fall in Q1. Owners in Jumeirah Village Circle enjoyed a 6% increase in average sales value in Q2 following an 8% fall in Q1. International City saw the steepest decline, with average sale prices there down 7% over the previous quarter.

Palm Jumeirah was the only area of Dubai where villa sales values went up, by 4%.  Arabian Ranches, Jumeirah Park and The Lakes all saw small declines, while sales values in The Meadows and The Springs remained flat.

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Abu Dhabi Sees World’s Sharpest Decline In Property Prices

Property prices in Abu Dhabi declined faster in 2017 than they did anywhere else in the world, according to a new report.

According to Knight Frank’s Global Residential Cities Index for 2017, property prices in the UAE capital declined by more than 9% last year. It was ranked 150th out of the 150 cities listed on the index.

Dubai didn’t fare that much better, if we’re honest. The report ranked the UAE’s second city 134th on the index, having seen property prices slump by an average of 2% in 2017.

Dubai and Abu Dhabi were two of just 26 cities listed on the index that had seen property prices fall over the past year. Almost half of those cities were in Europe. As for the Middle East, overall, prices are going up, despite the 2017 slump seen by Dubai and Abu Dhabi. Over the past five years, regional property prices have grown by 58%.

Experts believe, however, that 2018 will be the year in which UAE property prices bottom out, with some expecting growth towards the end of the year.

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Dubai Property Prices Won’t Rise Until 2020

According to a new report from Standard & Poor’s, those looking to buy property in Dubai will have plenty of time to take advantage of relatively low market prices.

The ratings agency’s latest report says that the “correction” in real estate prices that Dubai has seen over the last couple of years will continue until 2020 at the earliest. The reasons for the price downturn, S&P said, were to do with low oil prices, the introduction of VAT, and a glut in new housing units.

Naturally, this is good news for first-time investors, or property buyers with the capital to purchase a slew of new units. However, as has been the case with property prices, rental yields have also softened over the past couple of years, with landlords having to take extra precautions to attract and retain tenants.

Still, with home prices now 15% lower in mid-2017 than they were in 2014, new investors will certainly be interested in snapping up some property in Dubai. In fact, S&P estimates that prices for some residential units may have slid by up to 10% further since mid-2017.

As to when prices are expected to rebound, the S&P report said that 2020 would be the earliest that property prices pick up.

“We believe this correction will continue at least for this year and next, before prices stabilise in 2020 at the earliest,” the report said.

However, the ratings agency added that, when 2020 comes around, and Dubai hosts the World Expo, there may be a bounce back in terms of property prices.

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Why Dubai’s Prime Real Estate Market Is Good For Long-Term Investors

If you’re looking for a long-term investment in real estate in Dubai, the prime segment of the market will provide the best returns, according to a new report from Core Savills.

The real estate consultancy said that low taxes, combined with a relatively low-cost prime market, made luxury real estate in Dubai a solid investment. Indeed, it said that prime and ultra-prime prices were among the lowest in any of the world’s major hub-cities.

What’s more, the market is relatively small, Core Savills said.

“Despite the popular global assumption that the majority of Dubai’s real estate stock and transaction volumes are concentrated in the prime and luxury end of the market, this sector represents just a small portion,” said David Godchaux, CEO of Core Savills.

“In fact, only 3% of residential transactions in 2017 were concluded within this segment.”

The point here is that there’s plenty of supply when it comes to prime real estate in Dubai. And as for the price point, well, that’s pretty attractive as well if you compare Dubai prime prices to those in other global cities.

For example, prime properties are 40% less expensive in Dubai than they are in Singapore, and 50% less expensive than Moscow or Paris. Buying and selling fees come to less in Dubai, too. They’re 8% less than in Shanghai, and 32% less than in Tokyo.

All of this means that, if you’re in it for the long haul, prime real estate in Dubai makes for a pretty attractive investment opportunity.

“The long-term investment potential in Dubai’s prime segment is reinforced by a nominal tax regime is reinforced by a nominal tax regime and notably low real estate investment costs,” said Godchaux.

“These costs, associated with buying, holding and selling property, can detract significantly from an investment and essentially erode the attractiveness of an asset.”

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Here’s How You Can Save Up To 20% On Your Next Dubai Property

Looking to save a whole lot of money on your next property investment in Dubai? Obviously you are, so you should probably get yourself down to the Dubai Property Festival, which is set to be the largest property promotion event in the Middle East.

The event comes as the result of a partnership between the Real Estate Investment Management and Promotion Center, the investment arm of Dubai Land Department (DLD), and the International Property Show. It’ll take place at the Dubai World Trade Centre from April 9 to 11.

It will include a series of global activities aimed at attracting investment into the UAE’s real estate market. Offers on the lowest mortgage rates with a profit margin of 1.85% per annum will be available, as will discounts of up to 20% on certain projects.

And if you see a property you like, you’ll be able to place a down payment on the spot, because the event is authorised by the Real Estate Regulatory Agency (RERA).

“The festival will offer discounts and exclusive promotions for three days, with developers providing special rates, reasonable introductory payments, and lower registration fees. In order to offer all real estate services under one platform, free legal services and consultations will also be available, as well as a property auction and local deals through live auctions,” said Dawood Al Shezawi, Head of the Dubai Property Festival Organising Committee.

“In addition, the banks will be offering exclusive promotions including no registration fees or service charges, and customers can receive pre-approvals during the festival at discounted rates.”

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Dubai Property Prices Are Down 2% Year On Year

The average selling price of a residential property in Dubai fell 2% year on year for the first quarter of 2018. That’s according to research by chartered surveyor and property consultant, Cavendish Maxwell.

The report noted that villas and townhouses traded at an average of around AED 2.7 million and apartment transactions averaged AED 1.2 million.

While prices declined across Dubai, there were variations between areas and types of property.

“Price movement in the last 12 months has varied not only between communities but also among different buildings within the same community, thus reflecting greater differentiation in how available properties are now trading,” the report noted.

“This differentiation is expected to continue as buyers have an increasing supply base to choose from and property fundamentals such as developer track record, proximity to social and public infrastructure, ease of access, maintenance, among other factors will drive price movement.”

The steepest declines in apartment prices were seen in JBR (-2.5%), while the biggest fall in villas/townhouses was in Jumeirah Islands (-3.0%).

Approximately 3,800 residential units were handed over across Dubai in Q1 2018, with more than 92% of the units being apartments. International City, Jumeirah Village Circle and Dubai Studio City each accounted for more than 250 handovers.

You can download a full copy of the report here.