Dubai’s real estate market is showing robust signs of resilience with both rents and prices of quality properties recording an upturn after remaining in the doldrums for years, a new study revealed on Sunday.
“Quality residential developments in Dubai bounced back during the second quarter after a stable first quarter, with average rent increases of six per cent for apartments and nine per cent for villas,” said Asteco, a leading UAE property management company, in its report. Sales prices recorded double-digit increases in three developments, with rises of six-eight per cent elsewhere, it said.
“After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes,” said Elaine Jones, chief executive at Asteco. Towards the end of first half in 2012, rentals in established quality communities achieved average increases of six per cent.
Apartments in Dubai Marina and Downtown Dubai were the most sought after witnessing a 10 per cent increase, with a two-bedroom apartment fetching between Dh90,000 and Dh120,000 per annum. “Tenants are relocating in search of value-for-money, one- and two-bedroom apartments as well as three- and four-bedroom villas are the preferred unit types. In terms of rates, quality well-managed developments, will continue to set the pace,” commented Elaine Jones.
Dubai’s safe haven status and its upcoming investment protection rules have significantly helped reviving global and regional investor confidence in the emirate, particularly in the aftermath of Arab Spring, property analysts said. Even some of the leading property developers started to sell residential units, especially premium quality, over the past few months, underscoring this resilience, they said.
Asteco said leasing rates for villas followed a similar trend, stable throughout first quarter with an average increase of nine per cent through the latter part of second quarter. Mirdiff showed the largest increase with rent for a three-bedroom house increasing to Dh90,000 per annum a 13 per cent jump. Arabian Ranches recorded 11 per cent ruse, with a three-bedroom villa now costing Dh140,000 per annum.
Prices for one-, two- and three-bedroom apartments in Downtown Dubai, Dubai Marina, and Palm Jumeirah recorded price increases of nine per cent, eight per cent and eight per cent respectively during the first half. Elsewhere in Dubai prices remained relatively stable, with apartments in JBR seeing a three per cent increase.
Asteco predicted that sales prices would continue to rise for quality developments, especially villas. “The number of owner-occupiers rose steadily in line with improved financed options offered by banks, which we expect to continue. Further demand will also be evident from overseas buyers escaping economic woes in the eurozone and political instability in other parts of the region,” said Elaine Jones.
It was a different picture for commercial space which, despite an increase in leasing enquiries in the first half of 2012 as the regional situation improved, creating renewed interest in Dubai as a hub for business, was hampered by oversupply and tenant-dictated contract terms.