Dubai luxury property prices continue to weaken

A new report from Asteco shows prices at the luxury end of the market have dropped by an average of 10 per cent.

Apartments in Dubai Marina have dropped in value by as much as 17 per cent, according to Asteco. Antonie Robertson / The National

Prices continue to weaken at the top end of Dubai’s property market, although the correction elsewhere is tailing off, according to a new report.

But some affordable communities are still seeing sales growth, according to consultancy Asteco.

The company said prices at the luxury end of the market have dropped by an average of 10 per cent, although apartments in Dubai Marina have dropped in value by as much as 17 per cent and Palm Jumeirah units have fallen by 13 per cent.

In contrast, more affordable communities have witnessed price growth – apartment sales prices climbed by 3 per cent in International Media Production Zone, by 4 per cent in Discovery Gardens and by 2 per cent in Dubai Silicon Oasis.

Asteco’s managing director, John Stevens, said that newly launched schemes that are reasonably priced and offer good payment plans are continuing to attract investor interest, although, with affordability now seen as a major selling point.

"The second half of the year will see around 7,000 units come online, and while average rental rates have been relatively stable over the last few months, albeit with significant differences between areas, we expect the new stock to exert further downwards pressure in the next few months, and through to 2016 with 13,000 more apartments due for completion," said Mr Stevens.

Rents and sale prices in Abu Dhabi have remained stable since the summer, but there has been a general slowdown in transactions, Mr Stevens said.

He added that with limited supply available, he expects the market to hold steady.

“Annual rental rates for apartments and villas have increased by an average of 18 per cent and 9 per cent respectively, over the last three years, with the growing confidence and improved sentiment in the Abu Dhabi market over the last two years boosting investor ROI [return on investment]. However, the decline in oil prices has prompted a general slowdown in investment this year,” he said.

Apartments at Al Raha Beach and on Saadiyat Island recorded the highest yearly sales price increase with Al Bandar and Al Muneera up by 12 per cent and 9 per cent respectively.

A typical apartment in Al Bandar now sells for between Dh1,500 and Dh1,800 per sq ft.

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