The UAE’s property market witnessed mixed results in the first quarter as Dubai remained steady building on last year’s trend of stability while Abu Dhabi saw major declines as improved quality supply was handed over, said a report. In Dubai, while the rental rates for apartments and villas rose by one per cent and sales prices for villas increased by 4 per cent compared to last quarter, Abu Dhabi witnessed a 5 per cent drop in apartment and villa rents hinting that residential property prices were likely to fall further, according to top UAE property management company Asteco. The Dubai growth was mainly driven by the increasing numbers of owner-occupiers in areas such as Arabian Ranches, Emirates Living and Jumeirah Village, said Asteco in its property market report for the first quarter of 2012. According to Asteco, average yearly rent for a one-bedroom apartment in Downtown Dubai was Dh70,000 ($19,056) during the first three months of the year, up 5 per cent from the previous quarter while the average rent for a one-bedroom apartment in Jumeirah Lakes Towers rose by 3 per cent to Dh45,000. In the Meadows the average yearly rent for a four-bedroom villa increased by 3 per cent to Dh210,000 in the first quarter while a four-bedroom villa in Arabian Ranches were leasing for Dh175,000, up 2 per cent from the fourth quarter of 2011. 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 9 per cent to Dh12,900 per sq m during the first quarter while in the Greens prices increased by 3 per cent to Dh8,600 per sq m. Both areas are popular with executives and families. In Abu Dhabi, apartment and villa rents decline 5 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,” remarked Elaine Jones, the CEO of Asteco Property Management.
The average annual rent for a two bedroom prime apartment on the Corniche ranged between Dh120,000 and Dh160,000, off 6 per cent from the previous quarter.
Rents for a two bedroom apartment on Al Raha Beach fell by 14 per cent quarter-on-quarter to between Dh105,000 and Dh150,000 as a result of the large amounts of new supply handed over simultaneously in the area.
According to Jones, the 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, she added.
“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,” remarked Jones.
In the commercial market, the 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.
The rents in Bur Dubai eased by 6 per cent but popular business districts with limited commercial space fared better and achieved higher occupancy rates.
Office sales prices saw marginal declines of 2 per cent on average as a result of low transaction activity. Biggest declines were seen in Business Bay and DIFC where prices fell by 7 and 6 per cent respectively.
According to Asteco, the activity in Abu Dhabi’s office sector has slowed compared to previous quarter as companies continue to take a cautious approach towards expansion or relocation plans. Landlords of older buildings are becoming more competitive in their asking rents, which has led some firms to review their plans to relocate.
In Al Ain, the recent handover of several villa and apartment compounds has resulted in a wider range of accommodation options for residents, and therefore an increasing flight to quality.
Overall residential rents have remained relatively stable in the first quarter. However office rents in Al Ain fell by 10 per cent compared to the previous quarter, due largely to limited enquiry levels and a lack of quality supply enticing existing companies to move, the report added.