The UAE real estate sector will remain attractive in 2015 despite global challenges with the residential activity spearheading Abu Dhabi’s property market and Dubai's business enjoying higher consumer confidence, said a report.

Overall, the sector sustained the growth momentum of the past three quarters and moved towards a strong finish for the year, according to Abu Dhabi-based Tasweek Real Estate Development and Marketing in its final market intelligence report for 2014.

The positive microeconomic, regulatory and population factors continue to drive real estate growth across the UAE, stated the company in its Q4 market findings.

The country’s banks remain generally sound and profitable, although Tasweek cautions that the gross loans/deposit ratio is nearing 100 per cent, thus indicating more limited room for growth.

According to Tasweek, the domestic population remains on track to hit 18.83 million in 2023 from around 9.9 million in 2014-end to further stretch market demand.

Tasweek affirms a positive correlation between this growth rate and the increase in new UAE real estate projects. Moreover, government measures to dampen speculative activities in real estate and better control credit growth have further streamlined industry, it added.

Commenting on the findings, CEO Masood Al Awar said: "There are many factors pointing to the continued growth of real estate in the UAE in 2015 and beyond, including a surging population, a resilient economy with an overall inflation rate of less than two per cent, resurgent market confidence, and stricter regulatory controls on the sector."

"These were correctly predicted by Tasweek at the start of 2014 as the core drivers of the industry’s resurgence," he added.

On Abu Dhabi, Al Awar said its residential segment led the local market upsurge, supported by the reduction of supply as a measure for landlords to protect rent levels, the removal of the rental cap, and the return of government employees residing in other parts of the country to the emirate in compliance with new housing policies.

Overall, rent prices rose five per cent in the mainland and three per cent in freehold areas located at the outskirts of Abu Dhabi.

For the fourth quarter, the best studio deals were found in the Muroor Road and Al Markaziyah areas at an average annual rate of Dh57,750 ($15,721).  

The Muroor Road also offered the best 1-, 2-, 3- and 4-bedroom rates at Dh68,250 ($18,580), Dh84,000 ($22,867), Dh126,000 ($34,301) and Dh168,000 ($45,735). As for villa rentals, the Al Reef gated community had the best buys for 3-, 4-, and 5-bedroom units.

Al Reef also bested other areas in apartment and villa buy-side deals, posting an average price of Dh1,000 per sq ft for apartments and rates of Dh1.5 million ($408 million), Dh2.1 million ($326 million), Dh2.5 million ($680 million) and Dh3 million ($816 million) for 2-, 3-, 4-, and 5-bedroom villas.

On the Dubai scenario, Al Awar said the sales market continued to stabilise in Dubai during the fourth quarter of 2014. The observed slowdown in transactions is indicative of a growing market patience and confidence in the future, he stated.

On average, the sales prices decreased a little bit by three per cent compared to the third quarter. The hotel sector which has been underperforming over the second and the third quarters was expected to rebound during the peak fourth quarter of 2014, said the Tasweek in its report.

As for retail, the segment maintained its solid growth even as office transactions remained inconsistent due to high levels of supply, it stated.

Given how government data shows an average of 100 new commercial licenses issued daily, Tasweek expects new demand to absorb existing and future supply. Prices will thus remain at the same level for the meantime, it said.

According to Tasweek, the Dubai market has leveled off since the third quarter, with the ongoing announcement of new projects not expected to have an immediate impact on supply given the longer-phased nature of the developments.

The government measures to better regulate mortgage financing and double Real Estate Regulatory Agency's (Rera) transfer fees helped cool down the market in the last quarter. More buyers are expressing interest in Dubai’s off-plan property options, it said.

As predicted by Tasweek at the start of the 2014, the UAE’s real estate market ended strong thanks to a vibrant economy, a surging population, strategic sector-related government measures, and renewed global confidence in the country’s property offerings, remarkled Al Awar.

Abu Dhabi’s residential segment, he stated, stood out in the fourth quarter and is expected to lead the local market in 2015.

Dubai, on the other hand, is enjoying market stability characterized by a more patient and confident consumer base. Positive Q4 trends in the UAE’s two main property markets bode well for another solid year of real estate business in 2015, he added.

On the 2015 outlook, Al Awar said: "With preparations for Dubai World Expo 2020 starting to gain steam, we can expect 2015 to be another stellar year for real estate in the UAE despite a number of global challenges. Industry players can refer to Tasweek’s quarterly analyses to gear up for another period of consolidation and planning for future growth."

"The world is watching the UAE’s next moves as an invigorated property hub; we are confident that the country will deliver above and beyond expectations given the market developments of 2014," he added.-TradeArabia News Service