There has been a rise in Dubai’s real estate sales and rental activity in middle range property, according to the latest published guide.
Quality, size and value are important in the current difficult market, says the Sales and Leasing guide for the Dubai Market from Landmark Advisory.
The guide, intended to be used as a reference tool for clients looking to rent or buy property in the UAE, focuses on the price changes for residential and commercial property sales over the past three months and the change in rent prices for leased units over the last two months.
It is middle income end users and families who are buying, according to Jesse Downs, Director of Research and Advisory Services at Landmark.
Prices are falling as seller re-adjust to more realistic sums. ‘For both villas and apartments, we have noticed that sale prices dip around the time of handover. This is usually due to owners grappling with their final payment obligations, while also readjusting unrealistic price expectations. In addition, buyers can then benchmark new units against other completed developments,’ said Downs.
In terms of apartment rents, the report reveals that leasing rates over the past two months have largely stabilised with rents in some areas increasing in response to steady demand. For example, areas buoyed by Abu Dhabi demand, such as good quality units in JLT, have seen lower limit rents grow by 9%.
However, lower quality units have failed to show similar rent growth, while some areas continue to decline. An example of declining rents can be found in the Country Cluster units within International City, where lower limit rents fell 12%.
Sale prices for Palm Jumeirah apartments climbed 7%, while more average quality developments, such as International City, declined 10% in the past three months, the report points out.
‘We have seen that while sale prices for one, two and three bedroom apartments in some areas are increasing, the studio prices are falling. This is largely due to supply imbalances and waning demand. During the off-plan frenzy of 2005 to 2008, studios were overbuilt to maximize revenue without consideration for demand fundamentals. On the demand side, buyers are less interested in purchasing studios,’ Downs added.
Villa rents have largely stabilised over the past two months, with strong demand boosting rent levels in key areas, like Jumeirah and Emirates Living. Sale prices for villas have remained consistent over the past three months. Taken together, these points indicate relative stability in the villa segment, the guide concludes. Meanwhile, the Middle East and North Africa region is seeing an improvement in real estate potential despite the economic downturn, according to a new report.
The United Arab Emirates has risen significantly from 31st to 18th place in the 2010 Real Estate Global Opportunity Index from consultants AT Kearney which focuses on emerging markets. Saudi Arabia is in fourth place and Egypt has moved from 39th to 22nd.
Designed to help property developers decide where to expand outside familiar markets, the index examines real estate development potential based on construction spending and growth, as well as risk potential and ease of doing business.