Dubai hub to boost realty growth

Dubai - Dubai rents grow, Abu Dhabi's adjust after a year-long rally, says new report

Dubai and Abu Dhabi will continue to be the regional business and innovation hubs and keep attracting human capital from across the world, helping their realty sectors with a constant demand and impetus to keep on building, said Bayut.com in a report.
The report states that the ongoing slowdown of global economy has certainly affected demand in realty markets across the world.
A rallying dollar and rising interest rates coupled with falling oil prices have not only made international purchases costlier but have also forced several economies relying on oil exports for growth to introduce monetary and fiscal tightening.
The liquidity shortage will remain a challenge in the ongoing year, but Dubai and Abu Dhabi might well be in the clear, thanks to their limited - and in Dubai's case, five per cent - dependence on oil.
The governments remain committed to persisting with major projects and continuous developments in diverse sectors such as the real estate, financial, services, industrial, healthcare and tourism/leisure are driving both job and economic growth.
The Dubai Real Estate Regulatory Agency's rent calculator reported declines in various Dubai localities in January 2016 and Abu Dhabi's Urban Planning Council's new laws came into effect on January 1 that aim at regulating realty developers in order to make investors' capital even more secure. These developments have certainly had a positive effect on the real estate sector in both Abu Dhabi and Dubai.
Dubai
In January, Bayut.com noted Dubai apartment rents declining in certain bed groups while increasing in others. Average apartment rent in Dubai across all bed categories remained close to Dh138,000. The number was a three per cent increase over average apartment rent of Dh134,000 at the end of December 2015. As the prices in Dubai's real estate market have been experiencing soft adjustments over the course of the outgoing year and rents remaining robust, the return or yields for investors in the apartment category have become highly attractive. On average, apartment yields across Dubai were estimated at a little over six per cent, although the yields go up to 10 per cent depending on location and quality of projects.
However, not all individual bed categories posted increases in rents. In our month-on-month study, we found average annual rents for studio apartments at about Dh59,000, a negligible one per cent decrease compared to December 2015.
One-bed apartments were being rented for an average of Dh97,000 in January 2016, registering a 0.8 per cent decrease, while 2-bed and 3-bed apartments posted 0.1 per cent and 2.2 per cent increases with average annual rents of Dh151,000 and Dh211,000, respectively.
Again, the 4+ bed category saw a rental decline of 2.2 per cent in January 2016, down to an average of Dh330,000 from Dh337,000 December 2015.
Despite turbulence, property yields increased across all bed groups. Studio apartments offered average yields of 7.23 per cent, 1-bed apartments 6.4 per cent, 2-beds 5.7 per cent and three-bed category returned 5.3 per cent of the unit cost in January 2015.
The 4+ category was found to be offering the least yield at 3.55 per cent.
According to Bayut.com's search trends, Dubai Marina remained the most popular locality for renting apartments in Dubai, followed by Jumeirah Lakes Towers. Bur Dubai, Downtown Dubai and Business Bay rounded up the list of top five localities for renting apartments in January 2015, in that order.
Abu Dhabi
Average apartment rents fell five per cent in the UAE capital, down from a December average of Dh141,000 to Dh135,000 in January.
According to Bayut.com's study, annual rents of studio apartments in Abu Dhabi averaged Dh64,000 in January 2016, posting a 3.6 per cent decline in value compared with December 2015. One-bed apartments and two-bed apartments saw respective falls of 1.3 per cent and four per cent, with average rents at Dh99,000 and Dh136,000 in the first month of the year. Only the 3-bed category managed gains, registering a 2.3 per cent hike in value that made average rents climb to Dh192,000. The 4+ category saw the biggest decrease of 4.6 per cent, the rents falling down to Dh252,000.
- business@khaleejtimes.com

• Dubai