A new report from the global estate consultant Knight Frank has revealed that both house prices and rental rates across Dubai & Abu Dhabi fell significantly over 2018 as the demand for property across the UAE declines.
In Dubai, residential rates witnessed falls across the board, with mainstream prices down by 4.1%, apartments down by 4.8% and villas falling to 6.1%
While the prime sector remained somewhat resilient compared to the declining mainstream market, prime residential prices still fell on average by 3.3%
Knight Frank attribute the price decline across Dubai in 2018 to the ‘considerable level of supply’, the consultancy firm forecast 32,727 units will be completed this year.
The oversupply across Dubai has led to an ‘unabsorbed supply from previous years’ which is a major contributing factor to the pressure witnessed on prices and rents throughout the Emirate.
According to data by the Property Monitor Index, annual prices across apartments and villas in Abu Dhabi fell on average by 4.4% and 4.9% respectively with a -4.7% decline across a 12 month period.
According to the data gathered by Knight Frank’s research team above, Al Reem Island’s apartment value fell by 5.7% while seven of the ten sales markets tracked by Knight Frank saw a decline of 5% or more.
Rental rates across both Dubai fell on average by more than 7.7% in the year to November 2018 with apartment rents falling by 8.4% over the same period.
Meanwhile, in Abu Dhabi, there was an average slump of 8.7% over a 12 month period with villa rents falling by 8.4%, the same decline as apartments in the neighbouring Dubai
While there are ‘clear challenges’ facing the residential market across the UAE, the recent legislation to ease visa and foreign business ownership is expected to provide a significant boost to the property sector when the new visa legislations come into effect towards the end of Q1 2019.
One of the most significant visa regulations is the five-year retirement visas for those over 55 years old; those who invest AED 5 million or more in the property market (or with an income of more than 20,000 per month).
In addition to property related visas, a 10-year business investment visa for those who invest over AED 10 million in the enterprise is also expected to overcome the challenges posed by the residential market depreciation.
Featured Image: Sa7er90