Signs of property market stabilizing, according to Landmark Advisory

"For both Abu Dhabi and Dubai, positive signs of early recovery are emerging. Property listings are drying up as owners increasingly prefer to hold their properties for the medium- to long-term, instead of discounting prices further just to attract immediate buyers. Meanwhile, more owners are choosing to lease their properties as a cash-generating alternative to selling," said Jesse Downs Director of Research and Advisory Services, Landmark Advisory.


According to Landmark Advisory, average prices in Dubai during Q109 decreased 23% for apartments and 32% for villas, compared to Q408. Prices for 4-bedroom villas suffered the heaviest declines, at 16%.

Average leasing rates for apartments decreased 4% in Q109, with 1-bedroom apartments declining the most, at 11%. Average villa rents declined by 17%, but the number of villa rentals increased by 26%. Overall, residents are favoring moves to higher quality developments in Dubai.

"The leasing market in Dubai is still strong, showing continued interest from internal relocations and excess demand from Abu Dhabi. The future of sale prices and transaction volumes will depend largely on the evolution of lending policies and demographic changes over the next four months. In terms of population, additional outflows are likely to coincide with the end of the school year,"

said Downs.

Turning to Abu Dhabi, sale price declines accelerated during Q109, after falling by 5%-15% in Q408. Secondary market listing prices fell 15%-20% for apartments and 25%-30% for villas. However, by the beginning of Q209, sale prices started to stabilize as sellers slowed the pace of price-cutting.

Abu Dhabi's rental market has also stabilized. After sky-rocketing in 2008, some rents have begun to show signs of a marginal correction. On average, asked rents for apartments remained stable during Q109, indicating the resilience of the apartment segment. Villa rents, however, decreased 10%-15%, with listed rents on 4-bedroom units falling the most, at 20%.

"Abu Dhabi's sale prices are starting to stabilize, indicating improved market confidence. The buyer-profile is changing: end-users are replacing investors as the predominant owners of freehold property. End-users are particularly interested in developments that are close to completion, like Al Reef's Arabian district and Reem Island's Marina Square. Investors, on the other hand, are waiting for a price floor to emerge in order to reduce risk and maximize future returns," said Downs.