House-hunters find big homes, bigger price cuts in Dubai Motor City
It is a car aficionado’s dream community, but Dubai Motor City is just as popular among non-motoring enthusiasts judging by the number of families who have put down roots here. The clincher for these residents, according to property analysts, is a combination of price, size and amenities. “Several other factors drive the popularity and appeal of the area such as retail, shopping and restaurants along the main strip, which continues to expand,” said Zhann Jochinke, chief operating officer of Property Monitor. “Last year we saw the opening of First Avenue Mall, which has popular stores as anchor tenants. Additionally, there is a wide range of entertainment and leisure options like Kartdrome, Autodrome, etc. In addition to individual tenants and residents, there are large blocks of apartments and town houses owned by corporate entities and used as professional staff accommodation, such as teachers.”
Tenants will find attractive prices here this year, with Property Monitor reporting a 14.33 year-on-year decline in average rental prices. “The monthly rate of decline continues to follow this trend and we anticipate further declines in 2020, in line with the wider Dubai market,” said Jochinke. “Tenants may also find landlords willing to offer concessions and incentives such as multiple instalments and rent-free periods.”
Haider Tuaima, head of real estate research at ValuStrat, which reported an 89 per cent residential occupancy rate in Motor City, believes prices and rents will only see single-digit declines in the next two years. This will still result in significant savings for house-hunters as ValuStrat’s Price Index has already noted a 27 per cent decline in apartment capital values since their peak in mid-2014. Property Monitor’s research showed prices declined around 21 per cent for apartments and 28 per cent for villas and town houses in the same period.
According to John Stevens, managing director of Asteco Property Management, the competitive prices are “predominantly due to the sheer amount of units available for sale and lease, as well as the above-average size of the units, which previously achieved premiums due to the large balconies and terraces and/or additional maid, storage and study rooms”.
“While short-term new supply in Motor City is limited, the potential for long-term competition is significant due to the amount of vacant land,” Stevens added.
According to Asteco, apartment rents in the area currently range from Dh35,000-Dh45,000 for studios, Dh45,000-Dh65,000 for one-bedders, Dh65,000-Dh95,000 for two-bedders and Dh90,000-Dh130,000 for three-bedders. For villas, Asteco reports rents from Dh115,000-Dh150,000 for three-bedders, Dh180,000-Dh220,000 for four-bedders and Dh215,000-Dh260,000 for five-bedders.
For homebuyers, Motor City offers an opportunity to upgrade to larger units, according to Jochinke. “There is also interest witnessed from first-time buyers,” he added. Property Monitor has reported average villa and apartment prices of Dh835 and Dh701 per square foot respectively in Motor City. In the apartment segment, ValuStrat said capital values declined 10.7 per cent annually, with sellers last year achieving average prices of Dh495,647 for studios, Dh881,532 for one-bedders, over Dh1.28 million for two-bedders and over Dh1.55 million for three-bedders.
“The number of good deals in the market is significant, whether off-plan or in the secondary sales market,” said Stevens. “It is a good time to buy now if your investment horizon or requirement for self-use is medium to long term. There is a higher risk associated with the short-term investments as capital gains are unlikely given the projected supply.”
For investors, Property Monitor reports gross yields of 6.9 per cent for apartments and 5.17 per cent for villas. “Attractive purchase prices and yields would be the primary factors [attracting investors to Motor City],” said Jochinke.