Dubai realty outlook positive, apartments outperform villas: Knight Frank report

A recent report by the UK-based realty advisory, Knight Frank has revealed that Dubai’s property market has exceeded market average between Jan-April 2016.

The report points at three primary factors responsible for the positive performance including the government’s sustained efforts to upgrade infrastructure facilities (Route Metro 2020, Dubai Parks & Resorts) which have boosted investor confidence, the consensus among builders to streamline supply as per the demand and the strong influx of capital from buyers based in traditional markets like Saudi Arabia and India who continue to invest in Dubai’s residential realty.

According to earlier media reports, over 150 nationalities have invested a whopping AED135 bn in Dubai’s property market last year alone.     

The report further adds that while the residential sales index has remained stable in the first four months of this year, the sale price index was relatively flat showing no obvious change in the performance of villas or apartments, notwithstanding the annual 9% y-o-y decline in the mainstream market.

Further there was a approx 5% decline in the Jan-April 2016 period vis-à-vis the same period last year in the general Reidin Prime Price Index, while prices rose by about 2% on quarterly terms in the prime segment between Q4, 2015 and Q1, 2016.

Apartments located in prime locations continued to outperform villas during the same period with the Index clocking a quarterly 2% increase in the apartment segment while villa prices showed no significant change.  

 
Elsewhere in Abu Dhabi, sale prices continued to be stable mainly due to a shortage in the supply of quality residential units. The general Reidin Sale Price Index here clocked a minimal 1% increase y-o-y in the first quarter of this year.

According to the report, while the demand has been clearly impacted by the ongoing corporate restructuring and reduced government spending, the market continued to remain stable largely due to the slower delivery of projects here.

Elaborating on its assessment of market, Knight Frank said that while its difficult to predict the next growth curve, there is a possibility of a further softening of the UAE residential market in the second half of this year, prior to its gradual recovery over the next year.

However, prime residential properties are expected continue with their robust performance in the short-to-medium term. 

Reiterating Dubai’s premium positioning as one of the Top 5 most attractive global destinations for high net worth, the report adds that Dubai would continue to be an investment magnet from both a regional and global perspective, pending a favourable outcome to several ongoing global factors like the slump in oil prices and the US Presidential elections.