Affordable districts in Dubai hold stable - report

While Dubai apartment prices declined another six percent in the third quarter of 2010, sales prices and rental rates remained stable in some of the city’s more affordable districts, according to the latest report from Dubai-based property management company Asteco.

"Asteco has recorded an average drop of six percent for [apartments]. This is mainly attributed to the increasing supply of apartments. However, we have also seen increased sales activity, predominantly due to owners who are expected to take handover of their unit but are unable to make the final payment, which often constitutes a large percentage of the overall sales price," the report said.

However, the Asteco Dubai Q3 Report 2010, revealed that prices in traditionally more affordable locations, such as Discovery Gardens and Jumeirah Lake Towers (JLT), remained stable at AED500 ($136) and AED750 ($204) per sq ft respectively between July and September of this year.

Prices in high-end Downtown Burj Dubai, also remained stable at AED1,300 per sq ft, while stability was also evident among property prices in Emirates Hills (AED1,600 per sq ft), Jumeirah Islands (AED950 per sq ft) and the Green Community (AED700 per sq ft).

The rental market reported a similar story, with average apartment rental rates dropping six percent in Q3.

Again, JLT and Discovery Gardens performed better, registering rental declines of just two and three percent respectively in Q3.

“The number of transactions, which are generally at their lowest during the summer and Ramadan, has been surprisingly active with a number of people taking advantage of the quiet months to look for value for money accommodation. Therefore, the drop in rents has proved to be less significant than in Q2.

"Although further declines across the board cannot be ruled out, the drop in [Discovery Gardens and JLT] is expected to be less noteworthy due to the already lower rents," the report added.

The villa market performed slightly better, but sales prices still declined four percent quarter-on-quarter and the report attributes this to increased stock coming on the market in areas such as Dubailand and Dubai Silicon Oasis.

Asteco found that villa rental levels were much healthier, with tenants increasingly opting to move from apartments to villa developments.

"With an increase in activity over the summer, we expect this momentum to continue in Q4 2010 with expected demand predominantly coming from tenants looking to move from apartments to villas as rental levels continue to adjust.

"Villa rental rates seem to be more robust compared with apartments, which in part has to do with the fact that the current and future supply of villas is marginal compared to apartments," said the report.

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