Affordable housing in Dubai is outperforming a sluggish real estate market, with almost half of property search enquiries and sales transactions recorded in this sector, new research reveals.
UAE property search website Propertyfinder.ae claims more than half of UAE online viewings are for properties renting for less than AED100,000 per annum – despite the fact that properties within this range account for only a quarter of listings, it said.
The portal’s traffic represents 55 percent of all online searches for property to rent or buy in the UAE, according to Propertyfinder.
It noted that a continued undersupply of affordable housing in Dubai – particularly low-priced villas – is pushing up prices amid rising demand, enabling the sector to outperform the higher strata of the property market.
For example, Dubai’s Discovery Gardens provides the best yield in the UAE at 10.4 percent, the website said, despite advertised rents plunging 18.3 percent over 2016. By contrast, the luxury villa district of Emirates Hills delivered a yield of just 3 percent, the lowest in Dubai.
Propertyfinder’s COO Paul Stewart-Smith said: “With developers now being able to look into market trends and searches with more granularity and certainty, we expect to see more affordable and relevant housing being built.”
The findings reflects those contained in a report by CORE published on Monday. The consultancy’s Capitalising on a bottoming real estate market report revealed that the low- to mid-market segment is experiencing the highest sales transaction levels in the year to date, with almost 46 percent of transactions priced below AED1 million.
The report shows “a surge in transaction levels in the affordable segment of almost 50 percent of total volume, with possible absorption issues”, CORE said, adding that the low- to mid-market segment is showing “confirmed price growth”.
Estimate supply figures for 2017 indicate a shift towards suburban apartment districts with Dubai Silicon Oasis, Dubai Sports City and Dubailand accounting for 50 percent of total new stock, priced between AED800,000 and AED1.5 million, the report said.
It argued that Dubai’s prime residential market is still to bottom out, with further room for price softening before an expected uptick in 2017. Almost all of the mainstream neighbourhoods are already showing a steady rise in prices – apartment districts such as Dubai Silicon Oasis, Sports City, International City and Discovery Gardens have increased 3-5 percent from their lowest point in the first quarter of 2016 – while prime areas are still witnessing marginal price contractions quarter-on-quarter of between 1-2 percent.
CORE CEO David Godchaux said: “This has led some of the market players to announce that the market is still at the bottom or has not reached it, while in reality a nuanced analysis of the situation displays a wider spread in the real estate cycle.
“While the mid-market segment seems to have already seen several months of upward movement on prices, on the contrary we expect prime districts, such as Downtown Dubai, Dubai Marina and Palm Jumeirah, to continue their decline by 2-5 percent until early 2017.
“As this segment of the market is perceived to be close to the bottom, we anticipate demand from long term investors for core locations to continue intensifying over the next few quarters.”