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Dubai, Abu Dhabi real estate 'on path to recovery'

DUBAI, November 22, 2016

Heading towards the end of the year, the real estate markets in both Dubai and Abu Dhabi appear to be making strides towards recovery, said a report.

There has been a noticeable slowdown in the rate of price drops and a visible uptick in average rental values in both emirates following months of continued downward movement, according to UAE real estate portal Bayut.

The average price for apartments in Dubai dropped by a paltry 1.2 per cent in October compared to the Q3 value, while the fall in Abu Dhabi was also significantly smaller at 0.7 per cent.

Similarly, the average apartment rent in Dubai dropped by a negligible one per cent in October compared to the Q3 value, and posted an encouraging one per cent increase compared with the average rent in September, it stated.

The average apartment rent in Abu Dhabi held its ground against the Q3 number, while some individual bed categories posted healthy surges in rates, it added.

According to Bayut, the changes in both the rental and sale markets will have a positive bearing on the real estate market that is constantly fine-tuning its way towards maturity.

Apartment rents across all bed categories averaged Dh124,000 ($433,750) in October 2016, exhibiting a one per cent increase compared with the September 2016 figure. Average yield for apartments in Dubai also improved by one per cent point to climb to 5.6 per cent, though the rental yield for individual categories went as high as 7.8 per cent.

Studio apartments remained the obvious high performers during the month, posting gains in average rental value when compared with both September and Q3 2016 rates.

The portal said the rent for an average studio unit in Dubai climbed to Dh56,000, posting an eight per cent gain in value compared to the September average and a two per cent increase over the average rent recorded over the course of Q3. Yield for the category also outclassed others at 7.8 per cent.

At Dh92,000 per annum, the average rent for one-bedroom apartments showed a one per cent improvement over the Q3 average, but stayed stable against the Q3 value, returning landlords a rental return of 6.6 per cent. The rental rate of the two-bedroom category dropped one per cent compared with the Q3 average to Dh143,000, as did the Dh199,000 rental average for three-bedroom units.

The yield for both categories was recorded at six per cent. Although the rental yield remained sub-par for the four-bedroom-plus category in October, the rental average of Dh295,000 was one per cent higher than the average rent in September 2016.

The most popular apartment renting localities in October were Dubai Marina, Jumeirah Lake Towers (JLT), Al Nahda, Downtown Dubai and Bur Dubai.

On Abu Dhabi market, Bayut said the first three quarters saw rents in the UAE capital undergoing downward adjustments, making accommodations more and more affordable for tenants.

However, the downward spiral appears to be nearing its end as the average apartment rent in Abu Dhabi rose by one per cent to Dh130,000 in October compared to the price level the previous month.

The rental average also stayed stable when against the Q3 value, while the overall rental yield remained at an attractive seven per cent.

Like in neighbouring Dubai, studio apartments in Abu Dhabi led the upward charge with a nine per cent increase in average rent when compared with the September average. The Dh58,000 per annum average earned landlords an average yield of eight per cent.

One- and two-bedroom apartments witnessed increases of two and one per cent respectively, with rents averaging at Dh92,000 and Dh130,000. The average rental yields for the two categories in October 2016 were 7.2 per cent and seven per cent.

The three-bedroom category posted a two per cent increase in average rent, taking the average value to Dh174,000 and the yield to 6.4 per cent, said the UAE real estate portal.

Larger options in the four-bedroom category posted an increase of three per cent compared with the September value, with the average rent recorded at Dh254,000. Compared to the Q3 values, this increase was even more pronounced at five per cent, bringing more heartening news for landlords. The rental return for the category was recorded at 6 per cent.

On the future outlook, Bayut said considering the recent project launches, the inclination of developers to market more and more projects to first-time home buyers and genuine end users, and the robustness of UAE’s various economic sectors, it is safe to say that the real estate market is heading towards maturity, one where genuine demand from stakeholders regulates supply.

The upsurge in rental values and slowing down of price drops hints at the market edging towards stability following months of speculation over global issues such as Brexit and a liquidity crunch owing to low oil prices, it stated.

Amid fluctuations in regional and western real estate markets, the UAE offers a relatively stable playing field to global investors looking for capital value growth and superior rental return, stated the Emirati portal.

With the UAE economy having ably negotiated the oil price crunch on the back of its diversity, both Dubai and Abu Dhabi will continue to be regional real estate hubs and offer lucrative returns to anyone willing to have faith in their potential, it added.-TradeArabia News Service




Tags: abu dhabi | Dubai | real estate | recovery | Bayut |

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