Villa prices in Dubai are falling at a faster rate than apartment prices, according to the latest price index to be published.
Apartment prices fell 17% and the prices of villas plummeted 24% in the second quarter of this year, the index from Landmark Advisory shows.
Demand is up for villas as they are now regarded as being good value for money. The index shows that villas made up some 73% of all residential sales in the quarter.
Overall since peaking in the fourth quarter of last year, the prices for villas and apartments have fallen by 44% and 36% respectively, according to the data.
It also shows that average apartment rents in Dubai fell 23% in the same period while villa rents were down 19%. Since peaking in the third quarter of last year, villa rents have now dropped 31% overall and apartments rents are down 29% since their peak in the fourth quarter.
In the leasing market, Dubai landlords have pushed up rents temporarily by withholding properties from the leasing market, but in doing so they are only extending an inevitable decline, Landmark said.
High borrowing costs and disjointed lending practices are still having an adverse effect on the Dubai property market, Landmark analysts said.
The supply demand gap is expected to continue to grow. Analysts are warning that the office market in particular is facing a massive over supply situation.
‘Poor planning has created a supply glut that will take many years to resolve. The economic downturn is only part of the problem,’ they said.
Buyers are continuing to favour completed developments rather than off-plan investments.
Landmark also reported that in Abu Dhabi, sales prices fell by up to 1% for apartments in the second quarter and 8% for villas compared with the previous quarter, but prices are unlikely to suffer further significant declines.