26 February 2018

Good news for tenants: The decline in Dubai and Abu Dhabi rental prices to continue

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According to REIDIN’s UAE Residential Property Price Indices (RPPIs), the decline in the residential sales prices in Dubai has slowed down but the fast decline in rental prices is still effective – which is of course good news for tenants. Abu Dhabi, on the other hand, continues experiencing a higher decline both in rental and sales prices.

REIDIN, a leader in providing comprehensive and in-depth analytical information on the real estate sector in emerging markets, announced the UAE Residential Property Price Indices (RPPIs) for January 2018. The Indices are designed to be a reliable and consistent benchmark of housing sales and rent prices in Dubai and Abu Dhabi, with a purpose to measure the average differences in house prices in a particular geographic market through a timeline.

A slight decline in the sales prices in Dubai

According to Residential Property Price Indices, the Dubai Residential Property Sales Price Index for all residential estates decreased by 0.3 points, from 249.9 to 249.6, which represents a decline of 0.14 per cent in January 2018. Prices also went down by 3.67 per cent year on year. Apartment sales prices registered a minimal drop in January 2018 with a decrease of 0.03 per cent month on month, 3.74 per cent year on year. Dubai Villa Sales Prices also registered a drop in January 2018. Villa prices dropped 0.58 per cent month on month and 3.36 per cent year on year. Few areas in Dubai such as Dubai Sports City, Discovery Gardens and Dubai Marina registered a sales price increase in January 2018.

The downtrend in Dubai rental prices still effective

The Dubai Residential Property Rental Price Index for all residential estates decreased by 0.4 points, from 88.7 to 88.3, which represents a decrease of 0.43 per cent in January 2018 and 7.65 per cent decline year on year. Apartment rental prices registered a decrease in January 2018 with a 0.29 per cent drop month on month and a 7.43 per cent decline year on year. Villa rental prices registered a decrease in January 2018. Prices decreased 1.22 per cent month on month and 8.85 per cent year on year. Rental prices in some affordable areas such as Discovery Gardens, Jumeirah Village Circle and Dubai Silicon Oasis showed minor uptick changes.

REIDIN’s Operations & Research Director Ozan Demir commented: “Dubai and Abu Dhabi residential sales markets have continued to soften during January albeit on a lower rates when compared to previous periods due to subdued real estate investment activity. Even though average sales transaction ticket prices remained unchanged, number of residential transactions in the secondary and off-plan markets have declined around 25 per cent year-on-year in January 2018.”

Steady gross rental yields for Dubai

Gross rental yields for Dubai remained same when compared to the previous month.  Gross rental yield for all residential estates remained stable at 6.9 per cent month on month. For villas and apartments, the gross rental yield also stayed stable at 5.2 per cent and 7.3 percent respectively. Price-to-rent ratios for all residential estates and villas in Dubai registered a minimal increase month on month and reached 15.0 from last month’s 14.9, and 19.7 from 19.6, respectively. Apartments on the other hand, remained stable at 14.1, month on month.

Abu Dhabi to register a sharper drop in y-o-y sales price indices

The Abu Dhabi Residential Property Sales Price Index for all residential estates decreased by 0.4 points, from 91.8 to 91.4, which represents a decrease of 0.40 per cent in January 2018 and a 8.04 per cent decrease year on year. Apartment sales prices registered a drop in January 2018 with a decrease of 0.50 per cent month on month and 9.21 per cent year on year. Villa sales prices registered a decrease in January 2018 and declined 0.10 per cent month on month and 4.25 per cent year on year.

Abu Dhabi rental price indices dropped around 10 per cent year on year

The Abu Dhabi Residential Property Rental Price Index for all residential decreased by 0.9 points, from 88.7 to 87.8, which represents a decrease of 0.99 per cent in January 2018. Prices decreased 10.85 per cent year on year. Apartment rental prices registered a decrease in January 2018. Prices decreased 1.03 per cent month on month and also decreased 11.20 per cent year on year. Villa rental prices registered a decrease in January 2018. Prices decreased 0.92 per cent month on month and also decreased 9.55 per cent year on year.

Gross rental yields for apartments in Abu Dhabi registered a minimal drop

Gross rental yields for Abu Dhabi remained same month on month, except for apartments.  Gross rental yield for all residential estates and villas remained stable at 7.0 and 6.0 per cent, respectively. For apartments, the gross rental yield declined by 0.1 point month on month and reached 7.3 per cent. The price-to-rent ratios for all residential estates and villas in slightly increased month on month and reached 14.8 from last month’s 14.7, and 17.3 from last month’s 17.1, respectively. Apartments on the other hand, remained stable at 14.1, month on month.

About REIDIN UAE Residential Property Price Indices (RPPIs)

REIDIN UAE Residential Property Price Indices (RPPIs) are designed to be a reliable and consistent benchmark of housing sales and rent prices in Dubai and Abu Dhabi. The purpose of the indices is to measure the average differences in house prices in a particular geographic market through a timeline. Monthly REIDIN Dubai and Abu Dhabi RPPIs are calculated based on moving average median prices – an approach that is widely used for indexing housing prices – which involves median of sales prices of properties in a corresponding region. The official Dubai and Abu Dhabi Real Estate Residential Sales Price Indices provided to Bank of International Settlements (BIS) by the Central Bank of United Arab Emirates (CBUAE) is designed and produced by REIDIN.

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