Dubai villa rental market ‘stable in Q1’
Dubai, April 12, 2010
Villa rental rates in Dubai remained stable with no significant change in the first quarter of this year compared with the last quarter of 2009, said a report.
Apartment rental rates recorded a slight decrease of five per cent, largely due to the increased supply in the market, although some areas such as Downtown Dubai witnessed increases of two per cent, said the Dubai residential and commercial property market report for Q1 2010 published today (April 12) by Asteco, a top property services company in the UAE.
However office rents continue to decrease and have seen an average drop of seven per cent due to subdued demand and increased supply said the report.
“Over the past 25 years we have seen various peak and troughs in the property market with an overall incredible growth in the region,” said Elaine Jones, CEO of Asteco Property Management.
“The only constant is change and the positive upturn after every decline,” she added.
Demand for villas was predominantly for those in established locations such as Jumeirah where rental rates remain unchanged over the last quarter and in the Palm Jumeirah and The Springs which recorded slight increases of five per cent and two per cent respectively, the report added.
Developments along Emirates Road such as The Green Community and Arabian Ranches continue to generate demand from Abu Dhabi as rental rates are competitive, however, increased availability in Arabian Ranches, Green Community and Mirdif have resulted in slight drops in rental rates, according to the report.
The Asteco report pointed out that villa sales prices remained almost flat, recording an average decrease of one per cent over the last quarter.
Established communities such as The Springs, Meadows and Arabian Ranches are the preferred choice for buyers, the report said.
There is good demand for smaller villas due to the price point on both a sale and lease basis. Although the number of enquiries is strong, there is still a gap between asking prices and what buyers are willing to pay.
Apartment rents in Downtown Dubai and Palm Jumeirah increased by an average of 2 per cent and rents remained stable in Jumeirah Beach Residence due to the popularity of these developments which offer community living and an abundance of retail and entertainment facilities, the report added.
Apartment rents in areas such as Discovery Gardens, Dubai Marina and Jumeirah Lakes Towers “are expected to decline further throughout the year due to numerous projects reaching completion.”
Asteco said it has registered an increase in sales volume in Q1 2010 compared with Q4 2009, especially on the Palm Jumeirah and Downtown Dubai.
“This is in line with both increased availability of finance at lower rates and availability of affordable deals,” said Asteco.
Jumeirah Lakes Towers, Discovery Gardens and International City have also reported increased transaction activity and enquiries - mainly due to price reductions and handover of projects, according to the report.
Similar to villas, a large number of buyers are looking for smaller units in established locations due to a lower price point and the increased opportunity to lease the property out for investment purposes.
Office rental rates continue to decrease and have seen an average drop of 7 per cent due to limited demand and increased supply in areas such as Dubai International Financial Centre, Jumeirah Lakes Towers and Tecom.
The report further said that the number of enquiries remained stable from small- to medium-sized businesses looking for units ranging from 1,500 to 5,000 sq ft with the majority of tenants looking for fitted office space to reduce start-up costs and time.
“As more stock enters the market, this will continue to put downward pressure on rental rates and occupancy which will benefit tenants who are looking to upgrade in terms of quality and location.”
Sales prices for office units dropped by 10 per cent compared with Q4 2009 but despite the decrease, demand and resulting transaction volumes remain low, said Asteco.
Developments such as Jumeirah Lakes Towers, Tecom and Business Bay have recorded some activity over the last three months. Jumeirah Lakes Towers benefits from its affordability due to a large completed and near completed inventory.
Tecom, on the other hand, has a limited amount of freehold units and benefits from a large number of residential units in close proximity to a living and working environment. Asteco has seen a few transactions for Business Bay due to uncertainty over completion and the amount of construction which continues to hinder sales.
The report added that, according to free zone authorities, developers in Dubai are seeking to convert commercial developments into mixed-used projects in order to respond to changing market conditions. – TradeArabia News Service