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UAE apartment, villa prices down in Q2

DUBAI, July 11, 2016

The apartment and villa prices fell marginally (under one per cent on average) in the prime UAE markets of Dubai and Abu Dhabi with 12-month declines of six per cent and four per cent respectively, said a report.

The average rents in the second quarter have shown modest and reduced declines compared to the previous quarter, stated Cavendish Maxwell, a leading property services firm, in its residential market survey.

The report provides analysis and summary of apartment and villa properties for Dubai and Abu Dhabi, highlighting the price movement, rent and yield scenario, residential supply as well as the macro-economic factors impacting this segment.

Cavendish Maxwell survey revealed that for the third quarter, the majority of agents predict apartment and villa prices as well as rents to remain unchanged.

Apartment prices in Dubai declined up to one per cent during the second quarter and registered an average six per cent drop over the last 12 months. Prices have declined nearly 12 per cent since highs in Q2, with market direction largely imitating the oil price drop.

Locations such as Dubai Marina, The Views and The Greens, as well as Dubai Sports City have witnessed 12 month declines higher than 8 per cent.

"Transaction activity is expected to remain muted during the third quarter in line with past trends. Developers are promoting Ramadan-linked payment plans and the ‘affordable’ tag continues to be aimed at first time buyers," remarked Manika Dhama, the research manager at Cavendish Maxwell.

"However, this is unlikely to ramp up buying activity in the short term among this target segment given the restrictive mortgage-lending requirements and overall liquidity in the market," she stated.

In Abu Dhabi, price declines in investment zones were lower than Dubai, with an average 0.2 per cent drop in Q2 and four per cent on a year-on-year basis.

Locations such as Saadiyat Beach Residences and Al Raha Beach had higher 12 month declines than the market average. Investment yields for villas in Al Raha, according to the survey by Cavendish Maxwell.

Gardens and Al Reef areas continue to remain attractive at rates of 6.7 per cent on average. There is still a wide gap between the strong demand for high quality villas and the existing supply, keeping the price declines in Abu Dhabi investment zones at a much lower rate than in Dubai, it added.

Apartment rents in Dubai declined at similar levels as prices, thus investment yields remained largely unchanged this quarter.

“Renters have been able to negotiate discounts on new leases, while tenants have found it harder to negotiate lower rents on renewal,” pointed out Dhama.

Locations such as Jumeirah Lakes Towers, International City (clusters) and Jumeirah Golf Estates have posted 12 month declines of between 1 per cent to 3 per cent.

In Abu Dhabi investment zones, apartment and villa rents declined by 0.5 per cent on average. Studios and two-bedroom apartments registered higher declines than one-bedroom units.

Two bedroom apartments in Al Raha Beach and Saadiyat Beach residences witnessed 1 per cent declines in Q2 2016. “Low oil prices and job losses in oil and gas and construction sectors have impacted demand. However, average declines have reduced marginally from the first quarter when rents had fallen between 1 per cent to 2 per cent,” said Dhama.

The Hidd Al Saadiyat luxury villa development featuring 461 villas is due for handover in Q4 2016. It is expected to impact rents at the higher end of the market.

Approximately 2,800 residential units have been completed in Q2 in Dubai, while nearly 71 per cent of total units initially scheduled for Q2 have been delayed, said the report by Cavendish Maxwell.

The majority of the completed developments in Q2 2016 were apartments, with less than 4 per cent being villas and townhouses. There are 34,475 units scheduled to enter the market in second half of 2016, though delays are likely to greatly reduce actual delivery.

Of the additional residential units set to be delivered in the secopnd half, the majority are located primarily in Dubailand followed by Dubai Silicon Oasis and Meydan City, it stated.

In Abu Dhabi investment zones 570 units were completed in Q2 with an additional 3,100 units set to enter the market in the second half.

About 90 per cent of total upcoming supply in H2 is apartments, with Al Reem Island the key location for providing much of this. Nearly 11,000 units are expected to be added to investment zones between 2017-18, it added.-TradeArabia News Service




Tags: UAE | prices | villa | apartment |

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