UAE real estate recovery 'under pressure'
Abu Dhabi, September 18, 2012
The property markets in Abu Dhabi and Dubai are expecting prices to adjust further owing to the arrival of more fresh supply of housing units, according to a report.
The UAE capital is set to see a two per cent drop in its rents across different properties at various locations as new prime and non-prime supply enter the market, the UAE property expert Tasweek said in its report.
The real estate sector is expected to continue moving further in favour of tenants and occupiers after the delivery of an additional 2,900 residential units in the second quarter. The total stocks are currently at around 199,800 units, it added
Abu Dhabi continues to be under pressure from the swing of units coming online, while prime Dubai locations offer a bright spot with signs of price recovery, said the comprehensive report on the UAE market.
Both Abu Dhabi and Dubai property markets can expect prices to adjust further given the arrival of more new supplies, the expert stated.
According to Tasweek, the rents and sale prices were likely to fall between 2 and 10 per cent in the UAE capital at various locations, thanks to the fresh prime and non-prime supply entering the market.
Al Reem Island is a strong residential market, with average rent prices for studios at Dh90,000 ($24,496) and 1-, 2- and 3-bedroom units coming at Dh100,000, Dh120,000 and Dh160,000 respectively.
Many tenants are eyeing good deals at Muroor Road, which offers studio and 1-, 2- and 3-bedroom units at Dh50,000, Dh60,000, Dh70,000 and Dh85,000, respectively, the report stated.
With regard to the commercial space, Al Maryia Island has been fetching the highest rates at an average rent price of Dh2,600 per sq m, said the property expert.
However, the businesses can find more bargains at Markazeyah, where the average rental rate is 900 per sq m, it stated.
The commercial space for sale at Al Reem Island has an average asking price of Dh10,935 per sq m, the report added.
On the Dubai scenario, Tasweek said despite signs of price recovery in select prime locations, the emirate also may feel the same price squeeze as Abu Dhabi in face of the stream of new supply.
Non-prime and less popular areas in the emirate have been sustaining between 2 and 5 per cent price drop since the second quarter of this year, the expert said in the report.
The Dubai International Financial Centre (DIFC) commands the highest average annual rental rates in the emirate, at Dh75,000, Dh80,000, Dh110,000 and Dh230,000 for studio and 1-, 2- and 3-bedroom units, respectively.
Downtown Dubai is another solid market, with studio and 1-, 2- and 3-bedroom units going at Dh50,000, Dh65,000, Dh126,000 and Dh180,000 respectively.
Tenant bargains can be had at International City, where average annual payments are at Dh21,500, Dh32,000 and Dh40,000 for studio and 1- and 2-bedroom units, respectively, said Tasweek.
Dubai Silicon Oasis also offers good annual rates of Dh24,000 and 40,000 for studio and 1-bedroom spaces, the expert added.
Tasweek pointed out that DIFC once again led the local market in terms of average commercial rent and buy rates, with commercial space fetching Dh16,799 per sq m on the buy side and Dh1,605 per sq m on rental basis.
Jumeirah Lakes Towers offers the lowest rates at Dh4,077 per sq m for buyers and Dh535 per sq m for renters, the expert said.
With the exception of a slight rally observed in some of Dubai’s prime locations, real estate recovery is pressurizing property prices in general continue to fluctuate in Abu Dhabi and Dubai as more units continue to be added to the existing market inventories, the report stated.
This sustains Tasweek’s earlier predictions that financial obligations and return on investments will be the dominant factors towards market growth through the end of 2012, remarked Tasweek CEO Masood Al Awar.
The expected shift in demand to distressed Euro zone countries could further impact the UAE market, he pointed out.
He said more and more real estate investors were eyeing European bargains in light of the continent’s economic pressures.-TradeArabia News Service