Prospects bright for UAE realty
Dubai - Dubai on its way to maturity; demand for Abu Dhabi properties picking up
The prospects for the UAE real estate sector are good as the Dubai market is on its way to maturity while demand for properties in Abu Dhabi is picking up. The capital is likely to garner the interest of more investors in the months to come, according to a latest report by Bayut.com.
The UAE's leading property portal said the Dubai real estate market continued its price correction in August while Abu Dhabi registered some healthy spikes in both the rental and sales markets.
In its latest data, the property portal said the price stabilisation in Dubai coupled with steady or rising rents have made the emirate's real estate a better-than-ever proposition for a buy-to-rent decision.
Rubbishing fears of a market slowdown and falling prices, the Bayut.com report said developers across the emirate continued with new project launches at Cityscape Global 2015 as buying activity picked up at the end of August ahead of the premier property event in the region.
Rumours of an impending crisis and excessive supply have so far turned out to be exaggerated as not many of the anticipated 25,000 units have actually hit the market. The general sentiment in the market is one of resilience, with most stakeholders attributing the current period of slow growth to seasonal fluctuations and depreciating value of several currencies.
Bayut.com believes the cycle will take a U-turn in the coming months, especially when a new set of buyers enters the market to cash in on the now-popular affordable housing segment.
"With property developers beginning to respond to the needs of this important segment, many tenants will likely take the jump to becoming homeowners in the near future, leading to enhanced activity and demand for housing in the real estate sector," it said.
The property portal said studio rents across Dubai's most popular localities remained stable in August 2015. Dubai Marina and Downtown Dubai, which were among the top five locations for renting in Dubai, recorded a slight drop of four per cent and one per cent respectively due to a decreased demand from luxury home-seekers, who have been affected by a strengthening dollar.
Jumeirah Lakes Towers, Business Bay and Bur Dubai, the other three localities that make up the top five list, posted stable or marginal increases in rental values in August 2015 compared with August 2014, it added.
As far as sales prices in the top five areas are concerned, the property portal registered a marginal decline on a year-on-year basis. It said average prices for studio apartments in Business Bay dropped from Dh1.22 million in August 2014 to Dh1.06 million in August 2015, reflecting a decrease of 13 per cent. Prices for Jumeirah Lakes Towers dropped to Dh0.74 million in August 2015 from Dh0.84 million in August 2014, a drop of 12 per cent.
The report said prices in Downtown Dubai comparatively remained stable last month as studio rates in the area dropped three per cent on a year-on-year basis. However, prices in Dubai Marina registered a healthy 29 per cent year-on-year increase last month as the popular destination offers a lifestyle comparable to the best prime markets in the world, making it a top choice for expats thronging to Dubai for work.
Haider Ali Khan, chief executive of Bayut.com, said buying and selling in the Dubai property market during January to September 2015 has been subdued due to global economic concerns.
"This has been a good omen and has led the market into a direction of stability by curbing speculative activity, a trait reflected in many mature markets of the world," Khan told Khaleej Times. On the other hand, he said the rental market has continued to outperform and rental returns remain lucrative for investors. "The strength in the rental market also speaks highly of how Dubai has transformed itself into an economy based on a multitude of sectors and with the capacity to absorb economic fluctuations," he said.
To a question, he said Cityscape Global 2015 was a great event with developers showcasing the trust they place in this sector and the region.
"Healthy foot traffic at the event proves that the market is standing on firm ground and with a stable foundation in place, it is bound to flourish in the years to come," he said.
Abu Dhabi market
The Bayut.com report said demand in Abu Dhabi's real estate market has been boosted by the government's decision to introduce a rental index by the year end, other efforts to regulate the realty market as well as a constrained supply.
"The month of August saw stable trends in the UAE capital's property sector. Investment in infrastructure and economic development projects continued to create jobs, leading to a sustained demand for housing and accommodation from a workforce rising in numbers," it said.
The report added that housing demand coupled with limited supply of units has been pushing rents upwards. Although, Abu Dhabi's Urban Planning Commission approved 22 projects in the first quarter of 2015 and expects to approve another 68 projects by year-end, only 6,000 residential units will enter the market by the end of the year. "These units are likely to be delivered in The Wave, Saraya and Hydra Avenue on Al Reem Island, Amwaj 2 at Al Raha Beach and C59 in Rawdhat."
For August 2015, Bayut.com's popularity index showed Al Reem Island, Khalifa City A, Al Raha Beach, Al Reef and Mohammed Bin Zayed City to be the top five localities for renting units in Abu Dhabi. The most popular localities for renting apartments were Al Reem Island, Al Raha Beach, Al Khalidiyah, Khalifa City A and Al Reef.
According to the popularity index, the most popular localities for buying properties in Abu Dhabi were Al Reem Island, Al Reef, Al Raha Beach, Saadiyat Island and Al Raha Gardens. The most popular areas for buying apartments remained Al Reem Island, Al Raha Beach, Al Reef, Al Ghadeer and Saadiyat Island.
"Al Reef, Saadiyat Island, Al Raha Gardens, Hydra Village and Khalifa City A were the most popular localities for villa buyers," the Bayut.com report added.