The gap between apartment and villa/townhouse prices is narrowing in Dubai, says consultancy Cavendish Maxwell.
The first quarter of Q1 2017 marked the entry of lower priced villa/townhouse inventory into the market, taking the average trading price for villas and townhouses in Dubai from Dh2.7 million at the end of 2016 to Dh2.2 million in the first quarter of 2017. New villas and townhouses priced as low as Dh1.3 million were launched in areas such as Reem and Dubailand.
Meanwhile, apartment prices have stayed within a narrow range of Dh1 million to Dh1.5 million since 2016.
Over the last 12 months, ticket prices for residential properties have been made accessible to a wider range of buyers through a combination of smaller unit sizes as well as aggressive payment plans, where the bulk of payment is scheduled after completion.
Both apartment and villa/townhouse prices registered declines of two per cent in 2017 while residential rents declined four per cent. Areas including The Greens, International City, Al Furjan villas and The Springs witnessed the steepest annual decline.
"Landlords continue to offer incentives, including payment through multiple cheques and first month rent-free, to attract tenants who are currently benefiting from increasing supply and rent declines across the market," a report by the consultancy adds.
Number of cheques
The majority of rental agreements for residential properties in 2017 were in four cheques, unlike 2016 where one cheque agreements were most prevalent. In 2017, one cheque made up 35 per cent of all rental leases for villas/townhouses while four cheques accounted for 45 per cent of leases. For apartments, one cheque payments made up 22 per cent of leases and four cheque payments made up 58 per cent of total rental agreements.
The number of cheques could increase to six or even 12 in the future, estimates Cavendish Maxwell. The top areas where four cheques were more prominent include Emirates Living, Dubai Marina, Arabian Ranches, Reem, Downtown and Burj Khalifa. However, this trend is expected to become common in other locations in Dubai, particularly in emerging areas where new supply is being added.
The majority of off-plan transactions for apartments during the year were for studio and one-bedroom units, with Business Bay, Jumeirah Village Circle and Downtown Burj Khalifa ranked as the top locations for off-plan apartment transactions. Dubai Marina, International City and JLT were the top secondary market locations for apartment transactions.
Town Square, Serena and Dubai South were the top locations for off-plan villa transactions. Emirates Living, Reem (Mira) and Arabian Ranches were top locations for secondary market villa transactions.
More than 13,800 apartments and over 7,800 villas/townhouses were handed over in Dubai during 2017, estimates the consultancy. The majority of units handed over in 2017 were largely concentrated in Jumeirah Village Triangle, Jumeirah Village Circle and Liwan in Dubailand.
There are approximately 54,000 units scheduled to be handed over in 2018, including delayed projects from previous years. The actual materialisation rate for 2018 is expected to be in line with previous years, where annual handovers have ranged between 16,000 to 20,000 units.