The number of residential properties completed in Dubai last year was just 7,800 — considerably below the 25,000 units that had been forecasted by developers at the start of 2015, says JLL.
The property consultancy said in its annual UAE real estate market review that materialisation rates — ie the number of homes scheduled to be delivered that actually completed — has stood at just 30-50 per cent in recent years. As a result, it expects that much of the 26,000 units forecasted to be handed over this year will also not complete on time.
Sales of residential property across the UAE remained ‘subdued’ in 2015, JLL said, affected by the lower oil price, the strong dollar (to which the dirham is pegged) and geopolitical unrest.
It added that in the year to November, Dubai Land Department (DLD) figures showed that the volume of transactions fell by 33 per cent and the value by 28 per cent.
Citing ReidIn figures for November, it said that apartment sale prices in Dubai dropped by 13 per cent year-on-year, while villa prices fell by 11 per cent.
The lack of supply in Abu Dhabi – only 1,243 units were delivered in freehold investment areas last year, versus 1,600 in 2014 – meant that sale prices held up over the course of the year and remained flat in the 12 months to November. Rents increased by 3 per cent for apartments and 2 per cent for villas, compared to respective declines of 3 per cent for apartments and 4 per cent for villas in Dubai.
“Following a rapid increase of residential rents and prices between 2012 and 2014, the market has now clearly stabilised, with sales prices falling in Dubai and remaining stable in Abu Dhabi during 2015 — but with a significant decline in transaction volumes in both markets,” said Craig Plumb, head of research at JLL Mena.
“Prices softened by around 11 per cent in 2015 according to Rera in the Dubai residential market and are expected to decline further over the next six months.”
Estimates over supply figures became a hot topic last year, with Dubai-based developer Damac suggesting that over-optimistic supply pipeline predictions by consultancies were having “a detrimental effect on the generally positive sentiment in the market”.
The company’s managing director, Ziad El Chaar, said: “To suggest that Dubai is to be flooded with further housing is professional malpractice.”
However, JLL said that delays in project handovers were a result of lower sales, reduced government spending and a realisation among developers that they need to phase the completion of units in line with demand in a bid to avoid an oversupply. It said that many of the units that had been due to complete in 2015 have been pushed back to 2016 and 2017.
Earlier this week, the Dubai Land Department had claimed that real estate transaction values had increased by 8 per cent year-on-year to Dh267bn. However, JLL said that its assessment of the DLD’s figures were based purely on sales of buildings and units, and therefore stripped out land plots and mortgage transactions.
“This data shows sales declined in 2015 and we believe this is an accurate reflection of the market,” it added.
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