A new report has indicated that the Dubai property market is maturing as rent prices continue to fall throughout 2016.
The report, issued by Core UAE, the real estate consultancy affiliated with Savills, compares rental declines in apartments which have been in the range of 5-6 per cent in areas such as DIFC Downtown, Dubai Marina and JBR (Jumeirah Beach Residence). Meanwhile, villas have seen declines of 3-12 per cent since the beginning of 2015.
Apartments have also displayed a marginal drop of 4 per cent or less, it says, but areas like The Greens and Business Bay were seen as exceptions with prices remaining constant.
The fact that Dubai is one of the most affordable cities to buy a home compared to other major international hubs also makes it one of the most expensive to rent, with gross rental yields reaching around 9 per cent in the city.
However, this makes it a good time for renters and investors to look at the property market. According to the report, the current situation will encourage renters to consider buying property and investors to re-enter the housing market.
The CEO of Core, David Godchaux, said: “The Market has matured over the last few years. What we’re witnessing as a result of the price softening is the emergence of healthy real estate cycles dominated by players with a longer investment horizon.”
Dodchaux said that the decline in prices at a quicker rate in comparison to rents has resulted in increasing yields which is expected to continue for the best part of 2016. This will make it more interesting for renters to consider ownership and for investors to re-enter the market at lower prices and higher yield levels.
Despite the best efforts of developers, Dubai’s residential market is likely to see only a further 9,000-10,000 units being delivered this year as against the more than 20,000 units being forecast previously. This slowdown however will help moderate potential oversupply.