Villa rents also displayed drops, with Palm Jumeirah and Arabian Ranches (-5%) and The Springs and The Meadows, Al Barari and Emirates Hills all down 4%.
Cushman & Wakefield Core CEO, David Godchaux, says: “We continue to see rents in lease renewals to be market down or at least see no change. The trend of tenants moving out to outer areas, trading connectivity for larger units, exists, however, it is still slow as the cost offset doesn’t match up to the inconvenience and charges incurred.”
In contrast, sales prices are expected to rise over the next year off the back of landmark developments being delivered such as Dubai Water Canal, coupled with continued infrastructure spending on a robust pipeline of projects like Al Maktoum Airport, Dubai Parks and Resorts, Dubai Creek Harbour and Bluewaters Island, leading up to Expo 2020.
Mr Godchaux says: “Considering the current drivers and deterrents illustrated, we predict an uptick in Dubai sales prices in 2017 as a revival is clearly underway, however, an overall rise is expected to be very gradual. We foresee few submarkets to underperform - particularly the affordable and low-mid market segment are likely to be negatively impacted by the large amount of pipeline supply. Nonetheless, this effect may relatively balance out with the overall positive market sentiment coupled with the fact that developers continue holding back stock to align demand with absorption.”
Over 20,000 units are forecast to be delivered in 2017, with just 19% expected to be of prime residential stock, compared to over 30% in 2016.
“Although lagging in recovery, limited supply and sustained demand is expected to cast steady upward pressure on the prime segment by mid-2017,” added Mr Godchaux.
While a strong dollar and the continuing impact of Brexit in the UK may affect the buying power of traditional investor nationalities, there is confidence that GCC and other regional nationalities will continue to invest in Dubai as it strengthens its safe-haven status in the backdrop of growing austerity and geopolitical instability in the Middle East.
Mr Godchaux says: “We expect the continuing interest from investors to capitalise on the bottoming market, particularly for high yielding districts and mid-market segment within the price range of AED 0.8 - 2 million, to push transaction activity upwards.
“Off-plan apartment projects in Jumeirah Village and Dubai Sports City, especially those nearing completion, are enticing end-user occupiers as both these areas offer projects with better facilities and larger layouts. Prime apartments in Palm Jumeirah, particularly on the trunk, are expected to see steady off-plan activity in the run up to delivery due to better connectivity and access to infrastructure. However, a similar response with may not been seen for comparable projects located further away on the crescent.”