UAE real estate market stabilizes in Q2
Abu Dhabi, July 7, 2014
The UAE real estate has somewhat stabilised in the second quarter after the initial frenzy triggered by Dubai’s successful '2020 World Expo' win, said a property expert.
The Abu Dhabi government’s decision to revoke housing allowances for employees living outside the emirate continues to boost local rental prices, though, while Dubai’s own rental rates have been posting a 5 to 10 per cent increase on average from the first quarter, stated Tasweek, a UAE-based development company.
"For the second quarter the markets have been gradually cooling down and sustaining the gains made shortly after the announcement of Dubai’s Expo 2020 win. The market has more or less reached a level of stability driven by the key factors of affordable housing and rents that are fostering parallel growth in small and medium businesses," he noted.
This equilibrium will enable industry players to evaluate past trends and gear up for more diverse activity in the second half of the year. We expect confidence among global investors to continue to increase as the UAE rolls out new developments that are related to the Expo and the broader national development goals under the Vision 2021 plan,” remarked Masood Al Awar, the CEO of Tasweek.
The Abu Dhabi government's housing allowance policy has led to big gains in rental prices, especially for studio and 1- and 2- bedroom spaces where rent prices have hiked 20 per cent on average from the first quarter rates, said the expert.
The office market supply slowed down in the second quarter, with prices starting to stabilize. The commercial sector still has a long way to go before it recovers prices fully.
Some of the best residential rental deals can be found at the Muroor Road (studio ~ Dh35,000, 1-bedroom ~Dh50,000, 2-bedroom ~Dh75,000), Al Markaziyah (studio ~ Dh40,000, 1-bedroom ~Dh70,000, 2-bedroom ~ Dh80,000), and Al Reef (studio ~ Dh58,000, 1-bedroom ~Dh72,000, 2-bedroom ~ Dh94,000) areas. Al Reem Island offers studios for sale at ~ Dh688,600 and 1-bedroom homes for ~Dh1.072 million, while downtown Al Reef sells studios at ~Dh643,125 and 1-bedroom spaces at Dh913,384. Bigger 2- to 4- bedroom purchase options are available at Al Raha Beach and Hydra Village as well.
As for office leases, the best deals can be found in Muroor Road, Mohamed Bin Zayed City and Al Markaziyah; higher-end leases are available at Al Raha Beach and the Corniche.
According to Tasweek, the freehold market prices remain generally unchanged from the first quarter with a few transactions reported.
Dubai’s real estate market is currently controlling rental price upturns amidst recovering market activity and increasing stability resulting from government actions such as raising registration fees from 2 to 4 per cent and ensuring more transparency through integrated system checks. These actions aim to rein in the market and reduce price speculations, it stated.
With its population expected to grow 7 per cent to 3.4 million from 2015 to 2020, Dubai is expected to experience increased demand for real estate during the said period. At present, the best residential rental options can be found at International City (studio ~ Dh39,000, 1-bedroom ~Dh51,000, 2-bedroom ~ Dh72,000), Dubai Silicon Oasis (studio ~ Dh46,000, 1-bedroom ~Dh62,000, 2-bedroom ~ Dh87,000), and Discovery Gardens (studio ~ Dh52,000, 1-bedroom ~Dh70,000).
Good sale prices, on the other hand, can be had at International City (studio ~Dh409,000, 1-bedroom ~Dh568,000, 2-bedroom ~Dh920,000), Dubai Silicon Oasis (studio ~Dh468,000, 1-bedroom ~Dh734,000, 2-bedroom ~ Dh1.204 million), and Dubai Investment Park (studio ~ Dh470,000, 1-bedroom ~Dh782,500, 2-bedroom ~ Dh960,000).
As for office spaces, demand in Dubai continues to be far less than supply although the gap is closer compared to past figures. Tasweek expects demand to gradually climb over the next two to three quarters parallel to the projected economic growth of the emirate, said the expert.
Rents have generally remained the same through the second quarter, with Dubai Silicon Oasis and Dubai Investment Park offering the lowest rates per square feet and Dubai Marina and the Dubai International Financial Centre fetching the highest, it added.
Tasweek pointed out that government housing policy continued to have a positive impact on residential rental rates in Abu Dhabi, while Dubai’s property sector was likewise benefitting from regulatory actions taken by both the Dubai Government and the central bank and a solid portfolio of around 744 real estate projects underway collectively worth $123 billion.
"Abu Dhabi and Dubai continue to leverage the strong start of industry this year and will be able to plan for more diverse and dynamic real estate growth as the market settles down," remarked Al Awar.
"Industry remains on track to log what promises to be its best performance yet in recent years. Moving forward, attention to affordable housing and rental is vital to sustaining momentum beyond 2014," he added.-TradeArabia News Service