Dubai property prices to climb up again: ValuStrat report says

17.07.2016
ValuStrat experts have noticed evitable signs of a further prices bottoming out in Dubai.

Dubai real estate market have started to level off after 18 months of decline back in the begging of the year, and for its second half experts predict a sustainable growth of prices.

In its latest report ValuStrat consultancy noted that prices for apartments and villas in some of the monitored Dubai areas have already started to increase. ValuStrat takes the absolute value of 100 points set in January 2014 as a basis for its property price index (VPI). Compared to this, April and May's residential VPI registered 98.0 index points, while June saw a minimum decline by 0.1 percent to 97.9 index points.

According to the ValuStrat research manager Haider Tuaima, DLD transaction volumes for the 26 VPI coverage areas witnessed quarterly increases of 14 percent for apartments and 7 percent for villas in Q 2, clearly indicating the upturn in Dubai real estate sector.

That is not to say, that property prices will rocket up in a blink of an eye, but it seems the signs are indicating that Dubai has reached a predictable stage of the market, expects claim with ‘cautious optimism’. If all other economic factors are the same, it will stay this way for the next three to six months, ValuStrat forecasts.

Moreover, property prices are not the only thing increasing here – rental yields are paradoxically growing too. And the reason for this is in that Q2 median asking rents were 1.3 percent higher than Q4 last year and 2.8 percent higher than Q1 this year.

Actually, rental yields are seen as the main reason for the overall Dubai real estate market recovery. When you look at the yield numbers right now, you’re looking at 7.5 to 8 per cent for the general apartment market. And you’ve got 9 to 10 per cent for smaller units and more affordable property in places like Discovery Gardens, International City and B-type units in JLT.

Besides, there is no reason to worry about the demand in place, for ValuStrat estimates that total supply of residential apartments and villas to be completed in Dubai this year amounts to 16,326 units, which is just over half of the scheduled units developers planned to deliver this year.

But, there are still a lot of new projects in the pipeline. Nine off-plan residential projects were launched in Q2 to add more than 2,500 units to Dubai housing stock by 2020.

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