Palm Jumeirah properties post 13 per cent decline; affordable areas record sales increase
Dubai: Asteco has released its mid-year UAE market report ahead of Cityscape Global, highlighting stability in Dubai with a continued focus towards the affordable segment, in contrast to the high end market which experienced declines of up to 10 per cent.
Affordable apartment units at IMPZ, Discovery Gardens and Dubai Silicon Oasis showed 3 per cent, 6 per cent and 2 per cent sales growth over the summer months, whereas Dubai Marina and Jumeirah Beach Residences recorded a decline of close to 10 per cent while the Palm Jumeirah recording year-on-year reductions of 13 per cent.
"Newly launched properties with reasonable price and/or payment plans, and healthy prospective ROI, have been attracting solid investment interest, which will define market movement in the months to come as affordability remains a major driver for sales," said John Stevens, Managing Director, Asteco.
"The second half of the year will see around 7,000 units come online, and while average rental rates have been relatively stable over the last few months, albeit with significant differences between areas, we expect the new stock to exert further downwards pressure in the next few months; and through to 2016 with 13,000 more apartments due for completion," he added.
As expected, Abu Dhabi's residential market saw a general slowdown in transaction activity over the extended summer period, bar increased demand at Khalifa City, for villas in particular, but rental and sales rates remained stable. However, overall, the market is continuing its positive growth trend of the last 48 months.
With new supply levels limited, Asteco expects rental rates to hold steady. "Annual rental rates for apartments and villas have increased by an average of 18 per cent and 9 per cent, respectively, over the last three years, with the growing confidence and improved sentiment in the Abu Dhabi market over the last two years boosting investor ROI; however, the decline in oil prices has prompted a general slowdown in investment this year," added Stevens.
Apartments at Al Raha Beach and on Saadiyat Island recorded the highest yearly sales price increase with Al Bandar and Al Muneera up by 12 per cent and 9 per cent, respectively. Several new apartment developments were launched in the first half of 2015, on Reem, Yas and Saadiyat Islands, with some, such as Aldar's Meera at Shams Abu Dhabi offering very competitive rates.
Strong demand for villas in well master-planned developments also resulted in good sales volumes for projects such as the recently unveiled Al Merief Development and Nareel Island, exclusively offered on a plot-sale basis to Emiratis.
Apartment rental rates in the Northern Emirates also saw minimal changes over July and August with rents in Ajman, Umm Al Quwain and Sharjah remaining stable overall, with Ras Al Khaimah seeing a nominal one per cent decline.
The Al Majaz, Al Qasimiya and Al Khan areas of Sharjah also recorded a marginal decline with a handful of new buildings coming online and landlords offering one-month's free rent in a bid to secure high occupancies.
"Reducing vacancy levels are a red flag for Sharjah's residential rental market, which is also increasingly in existing tenants favour as they come into a stronger negotiating position when renewing current contracts," said Stevens.
Ajman and Sharjah residents are also looking forward to easing traffic circulation with Sharjah Transport Authority recently starting work on an Dh11.4 million roadwork project in the vicinity of City Centre, which is expected to be ready by year-end.
A total of 51 freehold villas targeted at UAE nationals, with a 100-year lease option for Arab expatriates, were also handed over at the Al Zahia Community in Sharjah, with a further 197 units to be ready by Q2 2016.
© Gulf News 2015
