Wednesday, January 19, 2011

Low, medium quality housing units record price declines

The selling prices of medium and low-quality residential units in Dubai will decline further during the first quarter this year, owing to surge in demand for high-end properties, said a report by Landmark Advisory, leading real estate consultancy in Dubai.

The January Dubai sales guide by Landmark Advisory states that it has identified a considerable price bifurcation on the basis of quality, particularly in the apartment segment.

Although the present trend seems to boost Dubai real estate market, the relative stability is seen only for chosen assets, the report pointed out.

As per the report, the sale-change patterns during the fourth quarter of 2010 were different when it came to apartments and villas.

The selling prices of villas depended on location, with significant declines being noticed in Central Dubai, where the prices for The Springs and The Meadows fell by more than 12 percent, said Jesse Downs, Director-Research and Advisory Services, Landmark Advisory.

However, in other areas of Dubai, such as units in Victory Heights, the four and five bedroom units actually increased in price owing to less supply in the market, she said.

Majority of the price declines occurred in Q3, while Q4 of 2010 was considerably stable, Downs said.

Generally, there is oversupply in the Dubai Market, and with significant new stock likely to enter the market shortly, there will be an adverse effect on selling prices, Downs pointed out.

Taking into account the findings since August 2010, the poor quality units were the worst performing assets in the emirate. Although the better quality units too, have been affected by price declines, it is not to the same extent. For instance, the lower quality units in the Dubai Marina during Q4 2010 dropped by nearly 10percent while higher quality units in the same area saw little or no decline, Downs explains.

The report said that apartment prices dropped more consistently across Dubai, with quality being the defining factor. Moreover, there are more apartments than villas that are likely to hit the market in the short-term, which would further add to current oversupply and continuing to bring prices down, Downs said.

As for commercial sector, the report said that the demand was more for renting rather than for sales.

According to Landmark report, significant price declines were noticed in Jumeirah Lake Towers (JLT), owing to new supplies there. While standard quality office space fell up to 30 percent in some cases, good quality spaces saw a decline of 15 percent, the report said.

The prices are likely to continue to fall for a while, but, the comparative shallow declines seen in the last quarter, actually indicate signs of boost for the real estate market in Dubai, Downs concluded.

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