The Saraya project in Abu Dhabi. Image courtesy: Arabtec
UAE real estate now a strong seller's market
Dubai, April 21, 2014
Real estate in the UAE is becoming more expensive with every passing quarter and the sector continues to show signs of a strong seller’s market, according to a study by Bayut.com.
As the cities grow outwards, secondary areas, which were not on the top list of investors, seem to be moving up the charts quickly. This is helping put a much broader and deeper recovery of the real estate market in place and giving a serious boost to investors’ confidence, the report said.
Property prices, which rose throughout 2013, continued their upward climb in the first quarter of 2014 and buried any speculation of a bubble, the report said.
Though 2008 is not in distant memory and the fast rise in prices has the individual buyers concerned about jumping into the market, these concerns are alleviated by sounder fundamentals, regulated governance and a strong job market.
Haider Ali Khan, CEO of Bayut.com, feels that the market will remain stable during the summer period and will gather steam in the latter half of the year. He reckons the summer would be a great time for potential investors to grab good deals.
Khan believes the property market is likely to see a 15-20 per cent increase during 2014.
During Q1 2014, property prices in the UAE experienced an overall growth of 35.9 per cent compared to Q1 2013.
For residential apartments, there was an average increase of 14.35 per cent in prices compared to the Q4 of 2013 and a significant 36.56 per cent gain compared to Q1 of 2013. Villa prices in the UAE also witnessed an average increase of 35.24 per cent over Q1 of 2013 and an increase of 11.27 per cent over Q4 of 2013, the report said.
Returns on apartment rentals also continued to ascend during the first quarter of 2014. Compared to Q1 of 2013, Q1 of 2014 showed an average increase of 17.79 per cent for apartments whereas the average increase came in at 5.76 per cent compared to Q4 of 2013. Villa rents also increased by 13.41pc compared to Q1 of 2013 and saw a 6.46pc gain over Q4 of 2013. The average rental yields recorded during Q1 of 2014 were 5.47pc and 4.55pc for apartments and villas respectively.
In one of its recent reports, JLL ranked Dubai the third in its City Momentum Index which is an indicator of its strengthening economy and real estate. Another report by Knight Frank listed Dubai amongst the world's fastest growing premium property markets. An HSBC forecast suggests that Dubai property prices are in for a 10-15pc growth during the current year. While all of these reports may be coming from different sources, they do have one thing in common -- they all point towards burgeoning property prices in Dubai and trends observed by Bayut.com reflect the same.
Statistics for Q1 of 2014 show an average increase of 36.89pc in prices from Q1 of 2013 and a 12.6pc increase over Q4 of 2013 for Dubai apartments. The rise in average prices of villas comes in at 30.18pc over Q1 of 2013 and a 4.64pc over Q4 of 2013.
Dubai rentals up
Apartment rents have also seen a healthy increase at 24.57pc over Q1 of 2013 and 8.29pc rise over Q4 of 2013. Villa rents have also managed a similar rise at 13.77pc over Q1 of 2013 and 9.20pc over Q4 of 2013. The average rental yield during Q1 2014 remained 5.34pc for Dubai apartments and 4.58pc for Dubai villas.
Such growth in both sale and rental prices of residential units in Dubai depicts strong demand for these properties in the market. The evidence for this demand also lies in real estate transactional volume in Dubai, which increased by 53pc in 2013 for an aggregate amount of Dh236 billion per Dubai Land Department’s statistics.
This demand is not only coming from investors but also from job growth in Dubai over the past year. The non-labour population in 2013 has gone up by 7pc compared to 2012 and Oxford Economics report estimates that Expo 2020 will create an additional 275,000 jobs over the course of next seven years.
Abu Dhabi realty sector
Abu Dhabi property market has also seen improvement in Q1 of 2014. Knight Frank dubbed the city, along with Dubai, one of the world’s fastest growing premium markets and that is evident by the city’s healthy rental yields.
Abu Dhabi apartments have fared better than villas since they have witnessed a positive year-on-year growth as well as a sequential growth in prices. Villa prices also increased in the last quarter of 2013 and gained even more steam with the start of the year. The average cost of an apartment in Abu Dhabi went up by 25.98pc compared to Q1 of 2013 and 3.51pc compared to Q4 of 2013. Villa prices on the other hand increased by 21.68pc over Q1 of 2013 and are up by 11.36pc over Q4 of 2013.
On the rental front, things seem to have cooled down just a bit for Abu Dhabi with rents just hovering below where they were in the last quarter of 2013. They are still up compared to the Q1 of 2013.
However, the rental yield in Abu Dhabi stayed stronger than Dubai. Bayut.com’s statistics reveal that Abu Dhabi boasted a healthy rental yield of 6.84pc and 7pc for apartments and villas, respectively during Q1 2014. - TradeArabia News Service