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Dubai property prices set to recover later this year

Property values in Dubai are close to bottoming out in some freehold clusters and the second half of the year could see a recovery in prices, according to a Q2 report issued by consulting firm ValuStrat.
The ValuStrat Price Index (VPI) gauges the monthly price change experienced by freehold properties in Dubai. The Q2 VPI displayed a 1.1 per cent annual decline in values. April and May's residential VPI registered 98.0 index points while June dipped slightly by 0.1 per cent to 97.9 index points.
General investor sentiment has been cautiously optimistic. Both investors and end-users are now completing deals only on well-located and correctly priced properties.
"For the second quarter of 2016, Dubai Land Department transaction volumes for the VPI coverage areas witnessed quarterly increases of 14 per cent for apartments and seven per cent for villas" says Haider Tuaima, ValuStrat research manager.
Residential yields went up as the median asking rents this quarter were 1.3 per cent higher than Q4 last year and 2.8 per cent higher than Q1 this year.
Around 16,326 apartments and villas are estimated to be completed this year. Nine off-plan residential projects were launched in Q2 to add more than 2,500 units to the residential pipeline by 2020.
Office sales prices fell by 10.6 per cent since last year and 1.1 per cent since the last quarter. Median asking rents for office space fell 4.6 per cent annually and 4.8 per cent since Q1 of 2016. The median asking rent for office space was Dh105 per square feet.
This quarter saw an additional 0.3 million sq ft of prime retail mall gross leasable area delivered with the inauguration of the phase one extension of Ibn Battuta Mall.
There were 99,211 hotel rooms and hotel apartments as of May 2016. Two hotels with 776 units were added in Q2. Eleven new hotels were announced to add 3,028 keys to the pipeline over the next three years.
The average occupancy during January till May was 83 per cent, unchanged since last year.
Due to the Brexit vote, there is a concern of lower tourism and retail spending by British and European tourists as a result of reduced currency values against the US dollar.
- deepthi@khaleejtimes.com