Confidence 'returns to Dubai residential market'
Dubai, December 11, 2011
The Dubai residential property market remained steady for the fourth consecutive quarter in a clear sign that confidence is returning to the emirate’s real estate market, according to a report.
The H2 2011 report from Asteco, a leading UAE property management company, shows that transactions are up showing demand is set to continue.
“Transaction levels are rising as job security and increased market confidence result in people seeking tenancy upgrades and home ownership,” said Elaine Jones, CEO.
“Asteco has also witnessed an increased number of new people relocating to the emirate as a result of the general lift in business performance,” Jones added.
Rental rates for apartments stabilised towards the end of 2011 having dropped marginally in the first six months with International City being the only development to see minor declines in the fourth quarter, easing just 2 percent from the previous quarter.
The average yearly rent for a one-bedroom apartment in Dubai Marina during the fourth quarter was Dh62,500 ($17,018) with a two-bedroom apartment going for Dh80,000 ($21,783). Rents for one-bedroom and two-bedroom apartments on Palm Jumeirah were Dh90,000 ($24,506) and Dh120,000 ($32,675) respectively.
Villa rentals were relatively stable throughout the whole year. Transactions in the rental market for both categories picked up as tenants took advantage of lower rates to move to better quality accommodation, while people also relocated to Dubai from other emirates.
Meanwhile, demand continued for locations such as Discovery Gardens, Jumeirah Lake Towers, Dubai Marina, Sheikh Zayed Road, Palm Jumeirah, Downtown Dubai, Emirates Living and Arabian Ranches.
Apartment sales prices also held their levels in the fourth quarter after slight declines in the first nine months of the year, however new areas or unfinished developments saw further falls.
Properties in Discovery Gardens, which saw a 10 percent drop in the third quarter, were unchanged towards the end of the year, another sign that market conditions are improving.
Sales prices for villas were unchanged in the second half of 2011 but the number of end-users buying both villas and townhouses increased as more families and professionals were able to switch from renting to owning.
The average sales price for a villa in Arabian Ranches was Dh8,000 ($2,178) per sq m and Dh7,000 ($1,906) per sq m in the Springs.
Sales and leasing prices in Dubai’s office market were also unchanged in the fourth quarter but activity remained low for sales as companies opted to lease rather than buy.
Looking at 2012, Asteco expects sales prices for apartments and villas to see marginal declines as some 10,700 new apartments and 1,300 villas are seen entering the market in Dubai in the first six months of the year.
This will add to the current supply of 397,800 apartments and 57,700 villas.
Price falls will be mainly in areas with ongoing construction and incomplete infrastructure but the level of transaction activity is set to continue with a rise in the number of end-user buyers.
Asteco also sees buyers from other Arab countries as continued regional unrest and economic uncertainty boosts Dubai’s safe haven status.
Apartment and villa rents are seen steady in 2012 with minor declines for low quality and poorly managed buildings in certain areas but the number of transactions are expected to remain high as further supply enters the market leading to more price competition for owners and choice for tenants.
Sales and leasing prices for offices are seen easing next year as an extra 773,000 sq m of office space are expected to be added in the first six months to the current supply of 8.5 million sq m.
Demand for office space is unlikely to improve for sales unless Dubai’s government offers more incentives. However, leasing enquires are seen picking up slowly as regional troubles prompt more companies to set up office in the emirate. – TradeArabia News Service