Tuesday, 27 June 2017

Positive signs a boon for Dubai, Abu Dhabi real estate markets

Written by Posted On Wednesday, 30 November 2016 09:29

Heading into the last quarter of the year 2016, the real estate markets in both Dubai and Abu Dhabi appeared to be making strides towards recovery. There was 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. The average price for apartments in Dubai dropped by a paltry 1.2% in October compared to the Q3 value, while the drop in Abu Dhabi was also significantly smaller at 0.7%. Similarly, the average apartment rent in Dubai dropped by a negligible 1% in October compared to the Q3 value, and posted an encouraging 1% increase compared with the average rent in September. The average apartment rent in Abu Dhabi held its ground against the Q3 number, while some individual bed categories posted healthy surges in rates.

Bayut believes that 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.

Dubai

Apartment rents across all bed categories averaged AED 124,000 in October 2016, exhibiting a 1% increase compared with the September 2016 figure. Average yield for apartments in Dubai also improved by one percent point to climb to 5.6%, though the rental yield for individual categories went as high as 7.8%.

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 rent for an average studio unit in Dubai climbed to AED 56,000, posting an 8% gain in value compared to the September average and a 2% increase over the average rent recorded over the course of Q3. Yield for the category also outclassed others at 7.8%.

At AED 92,000 per annum, the average rent for 1-bedroom apartments showed a 1% improvement over the Q3 average, but stayed stable against the Q3 value, returning landlords a rental return of 6.6%. The rental rate of the 2-bedroom category dropped 1% compared with the Q3 average to AED 143,000, as did the AED 199,000 rental average for 3-bedroom units. The yield for both categories was recorded at 6%. Although the rental yield remained sub-par for the 4+ bedroom category in October, the rental average of AED 295,000 was 1% higher than the average rent in September 2016.

Most popular apartment renting localities (October 2016)

1.       Dubai Marina

2.       Jumeirah Lake Towers (JLT)

3.       Al Nahda

4.       Downtown Dubai

5.       Bur Dubai

Most popular apartment buying localities (October’16)

1.       Dubai Marina

2.       Downtown Dubai

3.       Jumeirah Lake Towers (JLT)

4.       Dubai Sports City

5.       Jumeirah Village Circle (JVC)

 

Abu Dhabi

The first three quarters of 2016 saw rents in Abu Dhabi 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 1% to AED 130,000 in October 2016 compared with the September price level. The rental average also stayed stable when against the Q3 value, while the overall rental yield remained at an attractive 7%.

Like in neighbouring Dubai, studio apartments in Abu Dhabi led the upward charge with a 9% increase in average rent when compared with the September average. The AED 58,000 per annum average earned landlords an average yield of 8%. One-bed apartments and 2-bed apartments saw increases of 2% and 1% respectively, with rents averaging at AED 92,000 and AED 130,000 in that order. The average rental yields for the two categories in October 2016 were 7.2% and 7%, in that order.

The 3-bed category posted a 2% increase in average rent, taking the average value to AED 174,000 and the yield to 6.4%. Larger options in the 4+ bed category posted an increase of 3% compared with the September value, with the average rent recorded at AED 254,000. Compared to the Q3 values, this increase was even more pronounced at 5%, bringing more heartening news for landlords. The rental return for the category was recorded at 6%.

Most popular apartment renting localities (October 2016)

1.       Al Reem Island

2.       Khalifa City A

3.       Al Raha Beach

4.       Corniche Area

5.       Al Khalidiyah

Most popular apartment buying localities (October’16)

1.       Al Reem Island

2.       Al Raha Beach

3.       Al Reef

4.       Saadiyat Island

5.       Yas Island

 

Our Take

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.

 

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 returns. 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.

Rate this item
(0 votes)
Login to post comments

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.