Dubai property market stabilises in first quarter

Property market in Dubai start stabilising in the first quarter on recovery in residential segment while neighbouring emirate witnessed decline in rents on increased supply, according to the latest report by property management company Asteco. Office market in both the emirates experienced slowdown in the first quarter, compared to last quarter of 2011. Rents and sales prices recorded a marginal decline in both the markets. “We are seeing further signs that confidence is returning in Dubai as the residential market continues to recover. Rents in some areas have risen as quality developments slowly reach full occupancy,” said Asteco Property Management chief executive officer Elaine Jones said in a statement on Monday. In Dubai rental rates for apartments and villas rose by one per cent compared to last quarter of 2011, while sales prices for villas increased by four per cent during the same period, driven by the increasing numbers of owner-occupiers in areas such as Arabian Ranches, Emirates Living and Jumeirah Village. The average yearly rent for a one-bedroom apartment in Downtown Dubai was Dh70,000 during the first three months of the year, up five per cent from the previous quarter while the average rent for a one-bedroom apartment in Jumeirah Lakes Towers rose by three per cent to Dh45,000. In terms of sales prices for apartments, Discovery Gardens saw further declines due to the large amount of supply but prices were stable to slightly higher overall. The average yearly sales price for an apartment on Palm Jumeirah rose by nine per cent to Dh12,900 per square metre during the first quarter. Apartment and villa rents in the Capital declined by five per cent. Increased project handover are underway with some 3,000 residential units being delivered at Al Muneera and Al Zeina at Al Raha Beach as well as 1,455 units, which are now ready for occupation at Marina Square, Reem Island. The remaining 2,030 units at Marina Square are expected to enter the market over the next six months. The increase in supply in the higher-end segment of the apartment rental market in Abu Dhabi is likely to result in further downward pressure on rents,” Jones commented. The average annual rent for a two bedroom prime apartment on the Corniche ranged between Dh120,000 and Dh160,000, off six per cent from the previous quarter.  Villas witnessed similar declines with rents falling by as much as 13 per cent in MBZ and Mussafah as large amounts of average to low quality stock was handed back to landlords. Sales prices for villas in Al Raha Gardens, Golf Gardens and Al Reef Villas were largely unchanged however, once again highlighting that good quality villa communities are still in demand. In the commercial market, rental rates across Dubai’s office market eased by one per cent on average despite healthy enquiry and transaction levels as pending and upcoming supply continued to weigh. Office sales prices saw marginal declines of two per cent on average as a result of low transaction activity. Biggest declines were seen in Business Bay and DIFC where prices fell by seven per cent and six per cent respectively. Activity in Abu Dhabi’s office sector has slowed compared to the previous quarter as companies continue to take a cautious approach towards expansion or relocation plans.