Rents and sale prices in Dubai’s residential property sector are showing strong signs of reaching a plateau, according to a report by ValuStrat, a real estate consultancy based in the city.
The consultancy publishes the ValuStrat Index (VPI), which in May “demonstrated a clear trend of a plateau in Dubai’s residential prices”, according to the report.
ValuStrat had been forecasting the current situation since last year and highlighted minor price uplifts and notably increased transaction volumes in several locations during May at the Dubai Land Department as possible signs of a bottoming-out in monthly values across most of the 26 areas it monitors.
“The VPI for Dubai’s residential sector is constructed to represent the monthly price change experienced by typical freehold residential units within Dubai. The VPI provides an up-to-date opinion of current pricing and is a comprehensive weighted sample of all property types across the city,” ValuStrat said.
The VPI report for May found that compared to a 100 point base in January 2014, the May 2016 overall residential VPI registered 98.0 index points, with no significant change in values when compared to the previous eight months and down 1% when compared to the same period last year. “This marks a continuation of evidence of price stabilisation,” ValuStrat said.
During May, Dubai’s villa market registered 96.7 points, down just 0.2% since January, while the apartment market registered 98.8 points, up 0.3% since January, the report added. Among the facts that the overall VPI index for May revealed was that the price to rent yield ratios stood at 19 years for villas and 14 years for apartments while gross yields were 5.5% and 7.5% for villas and apartments respectively. Net yields were 4.4% for villas and 5.3% for apartments.