Latest Landmark Advisory August Sales Map: Abu Dhabi and Dubai markets stabilising

The latest Abu Dhabi and Dubai Sales Map from Landmark Advisory, one of the leading real estate consultancy firms in the Middle East, highlights these differences.

"In Abu Dhabi, we have identified that end-users remain the predominant buyers of freehold property, but in Dubai, investors continue to be the dominant source of residential demand," explained Jesse Downs, Director of Research and Advisory Services at Landmark Advisory.

According to the Sales Maps, sales in both emirates during June and July 2009 have been the most active since Q3/Q4 2008, with the majority of transactions in Abu Dhabi focusing on nearly completed developments, while market prices in Dubai are stabilising in preferred locations and for specific unit types.

In Abu Dhabi, average transaction prices for apartments have declined up to 10%-15% since May 2009.

"However, we found that the lower limits of price ranges have remained quite stable, extending the recent trend of price stabilisation. In terms of aggregate averages, listing prices have barely changed, but there are far fewer distressed listings for nearly completed developments."

said Ms. Downs.

Villa prices in Abu Dhabi have also remained stable, with only the lower limits of price ranges declining up to 5%.

"This is mainly a consequence of previous severe price declines, of up to 45% since Q308, which are now beginning to stabilise," explained Ms. Downs.

"It is important to note, however, that even if general prices keep their marginal correction, developments like Marina Square in Al Reem Island and the Arabian District of Al Reef Villas saw a 5%-10% increase in the lower limit of transactional prices, which corresponds with increasing interest in these developments."

The report also found that other developments in Abu Dhabi, like Sun and Sky Tower on Al Reem Island and Al Bandar on Al Raha Beach, both due for completion during Q2/Q3 2010, are still maintaining secondary market premiums, despite registering few transactions due to their higher price.

"It is still a completely off-plan market," said Ms. Downs. "Once product is actually delivered, sale prices for those projects will stabilise and may even improve. Sales volumes are expected to improve. During the next year, Abu Dhabi will witness the hand-over of its first freehold units. This will effectively mark the first time expatriates can purchase completed residential units in the capital, which is a significant structural change and will subject both the sale and leasing markets to further modifications."

Turning to Dubai, Landmark Advisory's research found that sales demand for 1- and 2-bedroom apartments are currently the most stable of all unit-types. This finding is consistent with the current leasing trend, which similarly shows that 1- and 2-bedroom apartments are the most popular. The Dubai market is also experiencing a supply issue at present.

"Developers built an excess of studios, which were originally popular with speculators and investors, but compared to the current end-user demand, these unit types now appear oversupplied in some areas," commented Ms. Downs.

"We also found that villa prices in Dubai are currently doing well, especially in new areas like Jumeirah Village, because of the good value offered. Going forward, we predict that stable demand for villas will promote continued positive performance in terms of both average pricing and sale volumes," continued Ms. Downs.

"Overall, Dubai sale prices are relatively stable, mainly due to recent supply-side action taken by sellers, but if rents keep falling for an extended period, then sale prices could be dragged down, as well," concluded Ms. Downs.