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ValuStrat issues Dubai real estate market report for Q3 2016

Report says that the monthly growth rate of residential values has been broadly stable for the past 15 months; however, the residential investment yields have compressed slightly

| | Oct 16, 2016 | 4:29 pm
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Haider Tuaima

Haider Tuaima

Dubai, UAE: According to the real estate review of Q3 2016 — issued by local consulting firm, ValuStrat — half of the freehold apartment locations monitored by the ValuStrat Price Index have initiated a gradual price recovery, whilst most freehold villa locations witnessed a continued marginal softening in values. The ‘ValuStrat Price Index (VPI)’ report revealed that increased quarterly residential sales prices, coupled with lower overall quarterly transaction volumes, indicated a cyclical trough stage for the residential market.

The report, the firm said, analysed 26 freehold locations in Dubai on a monthly basis, and it has shown that mostly mid-affordable locations initiated the price recovery process, with quarterly increases ranging from 2.3% to four per cent. The report highlighted that the high-end Downtown Dubai, which also witnessed a clear trend of positive correction over the last six months, has been exception. The third quarter 2016 VPI, the report said, displayed an overall marginal 0.6% annual decline in values. Furthermore, it said that the monthly growth rate of residential values has been broadly stable for the past 15 months, but marginally declined in the third quarter, which was expected. It added that the July residential VPI registered 97.7 index points, while August and September dipped by 0.1% to 97.6 and 97.5 index points, respectively.

The report has indicated that the residential investment yields have compressed slightly, as median asking rents were eight per cent lower than Q3 last year and 7.1% lower than Q2 this year. The highest net yields, it added, were registered in mid-affordable locations – ranging between 6.5% and 7%.

According to the report, for 2016, the latest estimated total supply of residential apartments and villas to be completed amounts to 15,191 units. It further mentioned that 10 off-plan housing projects were launched in Q3 to add more than 2,000 units to the residential pipeline by 2020.

The third quarter, the report revealed, saw an estimated additional 140,000 square metres (1.5million sq ft) of Gross Leasable Area (GLA) delivered in prime retail malls as a result of the inauguration of phase one of the Italian-themed Outlet Village mall by Meraas, located in Jebel Ali, and Majid Al Futtaim’s My City Centre Al Barsha.

Throwing light on the hospitality industry, the report highlighted that the total number of hotel rooms and hotel apartments, as of August 2016, in Dubai has crossed the 100,000 mark, with 100,211 units. It revealed that the average occupancy from January to August was 76%, compared to 77% during the same period last year. With five per cent more hotel rooms since last year, YoY Average Daily Rate (ADR) for the same period dropped by 10.8% and Hotel Revenue Per Available Room (RevPAR) fell 11.3% YoY, the report stated.

Haider Tuaima, ValuStrat Research Manager, commented: “…Even though sales transaction volumes came down in Q3, which is expected during the quieter summer months, DLD transacted sale prices for residential apartments have increased noticeably at 6.6% annually and 5.2% on a quarterly basis …”

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