Tag Archives: dubai
Residential property market in Dubai looking stable, says latest report
The residential real estate market in Dubai maintained its stability in the year to April 2016, despite prices falling, according to the latest analysis report on the emirate. Despite a 9% year on year drop across the mainstream market, the General REIDIN sale price index remained relatively flat on a monthly basis, with no noticeable changes in the performance of both apartments and villas, says the report. Dubai’s prime market continued to outperform the market average with the prime price index down 5% in the 12 months to April 2016 compared to the previous 12 month period, the report from international real estate firm Knight Frank. It says that it is encouraging that prices in the prime segment increased 2% on a quarterly basis between the fourth quarter of 2015 and the first quarter of 2016. The performance of prime apartments outweighed that of villas, with the index pointing to a 2% quarterly increase over the same period. In turn, prime villas recorded no significant price change. The Knight Frank report also says that a number of factors have supported this regulation in prices and are set to support the return of confidence to the market including the government commitment to infrastructure spending. It points out that while it is too soon to estimate the impact of the Expo 2020 on the residential sector, continued government spending on infrastructure projects geared towards the event such as Route Metro 2020 and Dubai Parks & Resorts will promote confidence in the market and is expected to draw further inward capital. There is also likely to be some control of supply as there is a general consensus among developers of the need to phase out residential projects in line with demand and strong liquidity with the residential real estate market in Dubai continuing to attract capital from strong liquid markets such as Saudi Arabia and India, two of the traditionally top buyers of real estate in Dubai. In Abu Dhabi, sale prices remained relatively stable on the back of a shortage in quality residential supply with the General REIDIN sale price index recording a 1% increase year on year in the first quarter of 2016. The report says that while demand has declined on the back of corporate restructuring and cutbacks in government spending, this has been balanced by a slowdown in the delivery of projects, thus keeping the market steady. ‘Looking ahead, the residential market in the UAE is expected to soften over the second half of the year. While it’s difficult to predict when the next growth cycle will be, we expect the residential market to level out by the end of 2016 before seeing gradual recovery in 2017. We expect prime residential properties will continue to outperform the market average in the short to medium term,’ the report says. ‘We expect Dubai to continue attracting investments both regionally and globally. However the outlook for the emirate in general and the real estate sector… Continue reading
Rents, sales and prices record moderate falls in Dubai in first quarter of 2016
The Dubai residential real estate market is experiencing moderate declines in rents and sales prices and transaction volumes are also down, according to the latest UAE property review. The analysis report from Asteco suggests that a focus on affordability is becoming more prominent in the emirate’s real estate market. Whilst no significant rent reductions were recorded during the first quarter of the year this may have been due to limited supply and the general trend continued to be towards increased competition amongst landlords. Leasing demand was stable in the first two months of 2016, however, a slowdown was recorded from March onwards, especially for more expensive properties where take-up was slower than usual. On average, rental rates stabilised in the affordable segment, and declined by 2% and 3% for mid and high end apartments, respectively. Asteco says that this minimal decrease was due to a combination of landlords trying to retain tenants rather than insisting on higher renewal rates, a decrease in the number of newcomers to the city, and in some sectors, housing allowance cuts and redundancies. Compared to the previous quarter, sales prices remained stable, with the exception of high end apartments and villas where 2% average declines for both markets were recorded. However, according to the Dubai Land Department (DLD), the first quarter of 2016 was considerably worse than the first quarter of 2015 as the overall residential transactions by total value were down by 25%, transaction numbers by 17% and the average sales price by 11%. Leasing activity at the beginning of the year started well, however, enquiry and transaction levels tapered off in March. The report suggests this was partially due to property owners keen to retain their existing tenants, and therefore willing to negotiate rental rates instead of having a property vacant. As a result, fewer tenants were seeking to move to a new unit. Asteco also noted a tendency for the more expensive units in buildings to remain vacant for longer, as tenants became more conscious of their spending habits. Whilst declines were limited over the quarter, year on year comparisons indicated an average of a 4% decline across the board. The most affected areas were those that had seen previous rapid rental increases for a relatively undifferentiated product. For instance, Jumeirah Lake Towers recorded a 12% decline year on year. ‘Indeed, whilst the community is attractive overall, the quality of most residential towers are below the tenant’s expectations considering the high rental levels. We have noted an increase in demand for affordable units. However, rental rates have not fallen far enough to warrant tenants to relocate from the Northern Emirates to Dubai yet,’ the report points out. ‘This is further compounded by the fact that for a similar priced product in the Northern Emirates would equate to a much smaller unit in Dubai. For instance, AED60,000 would mean a two bedroom unit in Sharjah as opposed to a studio or a small… Continue reading
Residential property market in Abu Dhabi slow in first quarter of 2016
In Abu Dhabi real there was a slight decrease in demand for higher priced residential units but sales activity was slow although relatively stable except for a handful of transactions concluding at below market rates. A fee of 3% on home rentals was announced as a Municipality Contract Fee, which will be applied to all Abu Dhabi’s expat residents and this could affect the market, according to the latest UAE property review from Asteco. Rental rates for prime and high quality residential apartments fell 2% compared to the fourth quarter of 2015, the report data shows. However, apartment rental rates remained, on average, 4% higher than the previous year’s rates. Mid and low quality units, in contrast, recorded stable rates with only a slight decrease for larger units, as tenants moved to newer developments offering similar or lower rental rates. Similar to the apartment sector, rental rates in the villa market were relatively stable in the first three months of 2016. However, there was a slight decrease in demand for the higher priced but older villas that are predominantly located on Abu Dhabi Island. In comparison, the majority of newer prime and high end villa developments, which include the Saadiyat Island projects, Golf Gardens, and Al Raha Beach, recorded their highest rental rates. The report suggests that a lack of quality villa communities continued to be the main factor behind the high rental rates throughout Abu Dhabi. Over the last 12 months, the prime and high quality villa projects recorded between 4% and 7% rental increases, while those for lower quality private villas decreased by more than 10% over the same period. A breakdown of the figures show that price movement varied with rates down by 5% to 7 % over the quarter in Reem Island communities whereas Saadiyat Island and Al Raha Beach recorded growth of 2% and up to 6% respectively and the report suggest this is due to the relative small availability of stock actually for sale in the market. The amount of upcoming supply on Reem Island, together with sales rates peaking in 2015, resulted in a large decrease in demand from buyers in the first quarter of 2016. Sales prices on Reem Island recorded an overall downward trend for the first three months of the year with rates for City of Lights dropping by approximately 10%, Sun and Sky Towers and The Gate Towers decreasing by 5% and 6% respectively, and Marina Square prices falling by 6%. The traded price at Marina Square in Q1 2016 ranged between AED 1,230 to AED 1,350 per square foot. The report also shows that after a period of strong demand for villas throughout 2015, the first three months of 2016 recorded limited sales activity. In particular, the more affordable units in the Al Raha Gardens and Al Reef developments saw only a few transactions taking place, of which most were below market rates. In comparison new developments on Yas Island were… Continue reading
