Dubai Residential Report, Q3 2020

DUBAI SAW AN UPLIFT IN THIRD QUARTER AGENCY ACTIVITY, WITH VILLA AND APARTMENT PRICE TRENDS DIVERGING

Dubai’s residential sector enjoyed a more buoyant third quarter, with pent up sales demand, along with tenants taking advantage of lower rents to relocate, spurring market activity.

Average apartment rents fell by 3.6% quarter-on-quarter (q-o-q) and 10.1% year-on-year (y-o-y), with average villa rents seeing more moderate declines of 1.2% q-o-q and 5.8% y-o-y.

Average apartment prices fell by 3.4% from Q2 2020, an increase in the rate of decline from the previous quarter, where prices declined by 2.6%. Conversely, villa prices saw a marginal fall of just 0.2% q-o-q, with the overall average bolstered by greater price stability across several locations and, in the case of Palm Jumeirah, a return to first quarter prices. Annually, apartment prices declined by 11.4%, while villas fell by 5.6%.

Residential transactions totalled 7,849 units over the third quarter, representing a near 50% rise q-o-q, although a fall of 21.7% compared to Q3 2019. Total transaction value reached AED 12.99 billion, a quarterly rise of 43.4%, although down 15.2% y-o-y. The recovery in sales activity was primarily driven by completed unit transfers, which accounted for 58% of total transaction volume, and two-thirds of transaction value, over Q3.

Q3 witnessed the announcement of several new policy initiatives likely to support the market longer-term, including Dubai Land Department’s ‘fractional title deed’ initiative and the launch of a new retirement programme offering five-year residency visas.

We expect the final quarter of 2020 to see further declines in average sales prices and rents, with performance set to increasingly vary by property type and location. While the longer-term outlook is less clear, assuming a broad economic recovery, we expect the market to see greater price stability over 2021.