A steady uptick in demand from end-users is expected to drive prices of villas and townhouses in Dubai as apartment prices face further declines on diminishing appeal in the wake of the pandemic outbreak, a research by a leading property consultancy said.
Colliers International in its outlook for Dubai residential market said given the continuing strong level of demand from end users in the market and people wanting to purchase property for their own occupation, it not only anticipates that villa and townhouse prices would remain strong but also an increase in prices in some areas in the fourth quarter.
“This does depend on the level and quality of new stock entering the market and whether or not the off-plan stock also becomes available,” said the report.
“Are we experiencing a mini bubble? The key to this lies in whether the sudden uptake in home ownership is a response to the lack of activity during the beginning of the year and will this surge in pent up demand market activity look to taper down as this interest filters out of the system. In the coming months, when stock levels recover from the sudden spike in demand it will be interesting to see if this level of activity is sustainable in going forward and what the impact on values will be,” said the report.
The research shows that while prices will increase in mature communities for ‘in demand” property, rental prices will remain competitive. The fourth quarter will witness increased amount of transactions and a shortage in supply of appropriate housing stock.
“From the respondents we spoke to, the majority had seen an uptake in clients moving from apartments to villas and townhouses. Aside from the benefit of having outside space is the prospect of gaining more living accommodation and with working habits changing as a result of Covid 19, the need for a study area or additional room has increased,” analysts at Colliers said.
The report said the research found increased levels of activity from end users and first-time buyers with a large proportion of these looking to finance the property through a mortgage.
“We have also seen increased transactions of higher end properties with a number of sales coming to fruition in areas such as Palm Jumeirah, District one and Jumeirah Islands. Due to lockdown restrictions, changing work habits, the desire for larger space and potentially a higher percentage of homeowners less attracted to apartment living, is something that we have noticed continuing into this quarter.”
According to Colliers report, a shortage of housing is something not many had anticipated would happen anytime soon in the Dubai real estate market.
“In 2020 it is expected to see an additional 25,000 to 30,000 new residential units (excluding the push forward figures from 2019) entering the housing market,” the report said.
However, a majority of respondents in the survey have identified a shortage for “in demand” housing stock in communities such as Emirates Living, Jumeirah Park and Arabian Ranches where there has been an increase in market activity.
“We have also noticed this in newer communities where reputable developers, combined with affordable properties are also seen as an attractive investment proposition, such as Dubai Hills Estate and developments off the Al Qudra road. A reason for the shortage in stock can be attributed to those sellers that have wanted to, or had a need to sell, or have already done so,” analysts at Colliers said. – [email protected]