They may be neighbours but the property markets in Dubai and Abu Dhabi appear to be going in opposite directions, according to a new report.The global economic crisis has resulted in an increasing divide between the two real estate markets with property prices falling 53% in Dubai in the last year but rising by 36% in Abu Dhabi, the Cost of Living report from Kershaw Leonard, shows.
The Dubai based recruitment and HR consultancy describes the real estate sector as a place where it is ‘survival of the fittest’ and a major contrast to 2008 which it compared to the California gold rush of the 1800s.
While Dubai’s house prices have fallen in some areas by more than 53% since September 2008, the report identified areas in Abu Dhabi where prices had increased by 36% over the past year due to an undersupply of new properties coming on to the market
‘Out of all the cities of the UAE, it is within Dubai that some of the biggest changes have taken place,’ the report said, adding that rental rates in some parts of Dubai have fallen by more than 50% since September 2008.
‘Yet, some of the most interesting observations of this year’s report are the increasing differences between Dubai and Abu Dhabi, and what some see as an increasing divide between the two cities,’ the report adds.
The rent for a studio apartment in Dubai Marina might now be 53% less than in September 2008, and a two-bedroom apartment in International City some 48% less, the report says.
While rent for a three bedroom villa in the Springs is around 44% less than a year ago and a five bedroom on Jumeirah Palm is 22% less, according to the report.
The picture in Abu Dhabi is a huge contrast. ‘Rental prices are not only on the increase from last September, but in some cases are considerably higher,’ the report says. They have increased 36% for a studio flat on the Airport Road and 20% for a one bedroom apartment on Muroor Road.
There is considerable undersupply in Abu Dhabi, it adds with 362,000 units needed in 2010, but only 340,000 will be available. Dubai, on the other hand, will see an oversupply of approximately 30,000 units in 2010.
Looking ahead, the report said that although a reported $582 billion worth of real estate and infrastructure projects have been put on hold or cancelled in Dubai, a further $700 billion worth are ongoing throughout the UAE.