DUBAI Dec 14 The delayed handover of about 6,000 houses in Dubai has helped rents remain flat so far in 2015 even though residential sales prices have fallen a lot more than 10 percent, sector consultants CBRE stated on Monday.
Dubai’s genuine estate sector has stuttered this year following a rebound close to the peak values of the previous decade as a sturdy regional currency produced getting house much more pricey for foreign investors.
Overall, Dubai apartment and house sales prices on average fell 16 and 14 percent respectively in the first 11 months of 2015, CBRE estimated, forecasting additional declines in sale costs subsequent year.
Apartment rents were flat over the exact same period, although property rents dipped four percent, CBRE mentioned.
“The (rental) market has held up quite effectively but it does not inform the complete story,” mentioned Mat Green, UAE head of research at CBRE Middle East. “We have a really fragmented industry.”
He stated rental values in the city’s a lot more expensive districts such as Palm Jumeirah and Dubai Marina had fallen even though more affordable, peripheral places have noticed costs rise in 2015.
CBRE had forecast 20,000 units would be handed more than in 2015, but only about 14,000 will be delivered by the end of the year due to late payments by investors, issues in acquiring completion certificates and some developers opting against releasing units. Sales contracts allow for some delays.
“These who have some flexibility in their delivery pipelines will stall their delivery until rental or capital values of those units give much better returns,” said Nicholas Maclean, managing director of CBRE Middle East.
“Delivering they do not have a commitment to deliver these units, it is a sensible way of performing improvement. A essential weakness of some developments in Dubai in the last ten years or so was the lack of phasing in deliveries.”
CBRE estimates Dubai’s residential sector can absorb 20,000 new units each year just before vacancy rates increase.
“You’re seeing a a lot more pronounced influence this year, but there is usually going to be some slippage,” said Green.
He forecast sale rates would decline by about ten % in 2016, even though performances would differ markedly by district.
“Sales are driven by sentiment, outside influences, the currency circumstance, so you’ve a lot of external fundamentals influencing the investment selection, it’s not simple to forecast,” stated Green.
The UAE dirham is pegged to the dollar, which this year is up 9.2 percent versus the euro, six.6 percent against India’s rupee and two.eight % higher against the British pound. (Editing by David Clarke)