ABU DHABI: Moving further away from previous year’s dormant second half, UAE’s real estate market remained stable in the first quarter of 2016, said a report. Major developers, including Emaar and Nakheel, did not shy away from launching mega projects in residential, as well as hospitality sectors, showcasing their confidence in the market’s future, stated UAE-based property portal Bayut.com. There were a few welcome signs of recovery in the apartment sale market in the second month of the quarter, with some bed categories posting encouraging gains.
The apartment rental category remained robust, with lucrative yields in both Dubai and Abu Dhabi keeping investors interested in the real estate markets of both emirates, it stated.
On the Dubai’s real estate market, Bayut said it sailed stably through the first quarter. “Not only did we see real estate developers carefully considering demand before supplying market with new units, we also witnessed an even distribution and movement of residents from the city centre to suburbs,” said the company in its report. Maturity is the word commanding Dubai’s property market right now and the slight adjustments here and there spell nothing but stability to emirate’s residential sector, it added.
Dubai Land Department reported that real estate transactions in the emirate during the first three months amounted to Dh54.78 billion through 12,568 deals. The number is impressive by any standard and part of the credit goes to strong rental yields that continue to make the market attractive to property investors. The market’s price adjustment, coupled with flexible payment plans offered by numerous developers is encouraging many tenants to become homeowners, said the UAE portal.
In a comparative study of Q1’15 with Q1’16, Bayut.com found apartment rents falling three per cent this quarter, while sale prices dropped by six per cent. The adjustments, it stated, are subdued and signs of a market adjusting itself.
However, when Bayut compared Q1 2016 average rents with those at the end of December 2015, the average rental value was found to have increased by three per cent. Apartment rental yields remained attractive at 6 per cent and reached as high as eight per cent in select bed categories. But as more and more households move to the cities suburbs, investment opportunities in areas like Dubailand and Dubai Sports City become all the more enticing, said the property expert.
“The increased popularity of these localities coupled with low property prices has resulted in rental yields as high as nine per cent. We think Dubai’s suburbs are ideal for both new home buyers – who can still benefit from low prices – and investors, who can enjoy impressive rental yields thanks to these areas’ rising popularity,” it said.
Average studio apartment rents in Dubai adjusted 5 per cent in the outgoing quarter, commanding an average of Dh60,000. Following the general trend, one- and two-bed apartments both adjusted 4 per cent commanding Dh98,000 and Dh154,000, respectively. Considering residential supply, almost 4,600 residential units were reported to be completed in the first quarter of 2016 and 10 per cent of there were actually projects delayed from 2015.
Majority of these were located in Jumeirah Village Circle, Mohammed Bin Rashid City and Dubailand. Although our quarter to quarter comparison shows an average adjustment of 3 per cent, it’s encouraging to note that rental values have gone up from the end-of-2015 mark, hinting at a market getting ample demand from a rising population, said the report.
On Abu Dhabi market, Bayut said the real estate market stood resilient despite oil the price crunch and the constrained supply with a two per cent downward adjustment in apartment rents and a similar three per cent adjustment in sale values.
As the lack of rental caps kept pushing rental values upwards throughout 2015, Bayut believes the adjustment is a positive development. However, Abu Dhabi continues to be a buy-to-let heaven with rental yields that average 7 per cent on the whole and go as high as 9 per cent in certain bed categories, it stated.
Compared to Q1’15, average studio rents in Abu Dhabi adjusted two per cent downwards to Dh64,000 in Q1’16, while rental values of one-bed apartment held their ground at Dh98,000. Two-bed and 3-bed apartment rents fell to Dh137,000 and Dh183,000, respectively, registering marginal decreases of 1 per cent and 3 per cent.
Average rental yields in Abu Dhabi remained lucrative as ever at 7 per cent. Studio apartments offered impressive yield of 9 per cent in Q1 2016, while one- and two-bed apartment returned yields of 8 per cent and 7 per cent, respectively, said the report.
On the future outlook, Bayut said: “As the year stretches into the second quarter, real estate activity in the UAE is poised to speed up. Mega projects like Reem Mall in Abu Dhabi and The Palm Gateway Towers and Creek Harbour in Dubai continue to lead the sector’s charge towards development and offering ample avenues for both investors and end users to put their thoughts and capital into.” Also, a number of infrastructure projects related to Expo 2020 are slated for initiation this year and will likely result in a lot of land resources and capital changing hands in the coming months, it stated.
“Non-oil sectors in both Dubai and Abu Dhabi continue to grow in strength, holding immense promise for the realty sector that banks on a thriving national workforce,” said the report. “Although the sector exhibited small sparks of positivity in the first quarter, we are certain the UAE market will show more of the same and remain buoyant in the near future, as it continues benefiting investors with hefty returns and homebuyers with unmatched value and quality of life,” it added.
