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Palm Jumeirah ... sees sharp decline in sales growth.

Dubai high-end properties under tremendous pressure

DUBAI, September 8, 2015

The top end of the real estate residential market in Dubai, UAE, remains under pressure as buyers shift focus to the affordable sector, said a report.

Affordable apartment units at IMPZ, Discovery Gardens and Dubai Silicon Oasis showed three, six and two per cent sales growth over the summer months, whereas the high-end properties in Dubai Marina and Jumeirah Beach Residences witnessed a decline of 10 per cent whilst Palm Jumeirah recorded year-on-year reductions of 13 per cent, stated real estate expert Asteco in its latest report.

The mid-year UAE market report comes on the opening day of Cityscape Global, highlighting the stability in Dubai with a continued focus towards the affordable segment, in contrast to the high-end market which experienced sharp declines.

“Newly launched properties with reasonable price and/or payment plans, and healthy prospective ROI (return on investment), have been attracting solid investment interest, which will define market movement in the months to come as affordability remains a major driver for sales,” remarked John Stevens, the managing director, Asteco.

“The second half of the year will see around 7,000 units come online, and while average rental rates have been relatively stable over the last few months, albeit with significant differences between areas, we expect the new stock to exert further downwards pressure in the next few months; and through to 2016 with 13,000 more apartments due for completion,” he added.

On the UAE capital, Asteco said: "As expected, Abu Dhabi’s residential market saw a general slowdown in transaction activity over the extended summer period, bar increased demand at Khalifa City, for villas in particular, but rental and sales rates remained stable."

However, overall, the market is continuing its positive growth trend of the last 48 months, it stated.

With new supply levels limited, Asteco expects rental rates to hold steady. “Annual rental rates for apartments and villas have increased by an average of 18 and nine per cent respectively, over the last three years, with the growing confidence and improved sentiment in the Abu Dhabi market over the last two years boosting investor ROI; however, the decline in oil prices has prompted a general slowdown in investment this year,” added Stevens.

Apartments at Al Raha Beach and on Saadiyat Island recorded the highest yearly sales price increase with Al Bandar and Al Muneera up by 12 and nine per cent respectively.

Several new apartment developments were launched in the first half of 2015, on Reem, Yas and Saadiyat Islands, with some, such as Aldar’s Meera at Shams Abu Dhabi offering very competitive rates, said the report.

According to Asteco, strong demand for villas in well master-planned developments also resulted in good sales volumes for projects such as the recently unveiled Al Merief Development and Nareel Island, exclusively offered on a plot-sale basis to Emiratis.

Apartment rental rates in the Northern Emirates also saw minimal changes over July and August with rents in Ajman, Umm Al Quwain and Sharjah remaining stable overall, with Ras Al Khaimah seeing a nominal one per cent decline.

The Al Majaz, Al Qasimiya and Al Khan areas of Sharjah also recorded a marginal decline with a handful of new buildings coming online and landlords offering one-month’s free rent in a bid to secure high occupancies.

"Reducing vacancy levels are a red flag for Sharjah’s residential rental market, which is also increasingly in existing tenants' favour as they come into a stronger negotiating position when renewing current contracts,” remarked Stevens.

"Ajman and Sharjah residents are also looking forward to easing traffic circulation with Sharjah Transport Authority recently starting work on an Dh11.4-million ($3.1 million) roadwork project in the vicinity of City Centre, which is expected to be ready by year-end," he added.

A total of 51 freehold villas targeted at UAE nationals, with a 100-year lease option for Arab expatriates, were also handed over at the Al Zahia Community in Sharjah, with a further 197 units to be ready by the second quarter of 2016.-TradeArabia News Service
 




Tags: Dubai | Asteco | pressure | high-end properties |

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