By: International real estate services firm, Chestertons
Sales prices and rental rates have marginally declined during Q3 with the average apartment sales price declining 1% with villas showing no movement. The same was true of the rental market where average rental rates for apartments fell by 1% while villas remained static from the previous quarter.
Nick Witty, Managing Director, Chestertons MENA, said: “There is no significant new supply expected to be delivered next year which means there could be a better balance between supply and demand, this, and a series of government initiatives including allowing foreign nationals to own freehold properties, will ultimately lead to a more stable market as we move into 2020.”
In the sales market, apartment prices remained resilient in the capital with a 1% softening from the previous quarter. Saadiyat Island saw no price adjustment in Q3, in stark contrast to the 8% decline witnessed in the previous quarter indicating the price point is now in line with market demand for this style of property at AED1,400 ($381.5) per sqft.
Al Reem and Al Ghadeer dropped by 1% in Q3 to AED965 ($263) per sqft and AED740 ($201.6) per sqft respectively while Al Raha Beach and Al Reef saw the highest price declines at 2% Q-on-Q to AED1,280 ($348.8) per sqft and AED797 ($217) per sqft.
In the villa sales market prices remained resilient with no price movements from Q2 2019. Al Raha Beach Area, Khalifa City and Al Raha Gardens remained at AED1,160 per sqft, AED872 per sqft and AED700 per sqft respectively. Only Al Reef and Al Ghadeer showed modest declines, dropping 1% to AED620 per sqft and 695 per sqft.
“Overall the capital’s real estate sector is showing signs of positive sentiment with a marked slowdown in sales price reductions. Developers are also recognising the need to be more creative to encourage sales and are now offering flexible payment plans and, in several instances, waiving the registration fee,” said Witty.
“We have also seen developers selling land plots to boost revenues. This type of purchase is expected to prove popular with Emiratis however, we could also see this pique the interest of other nationalities if positioned correctly,” he added.
Apartment rental rates declined 1% overall, as demand for affordable communities continued in Q3 as tenants remain price-conscious. As a result of this trend, Corniche Road and Saadiyat Island witnessed the highest rental declines of 4% and 3% respectively. A two-bedroom on the Corniche Road is now available for AED115,000 ($31,335) per annum, denoting a 6% decrease for this unit size compared to the previous quarter, while in Saadiyat Island, one-bedroom apartments saw an average 10% decline Q-on-Q to AED90,000 ($24,523) per annum.
Bucking the rental decline trend, Mohammed bin Zayed City and Al Raha Beach saw a modest increase in rental rates in Q3 of 1%. Two and three-bedroom apartments in Al Raha Beach Area increased to AED125,000 and AED169,000 per annum respectively. In Mohammed bin Zayed City, a one-bedroom increased by 5% to AED40,000 per annum.
Several apartment locations remained static Q-on-Q, these included Muroor, Al Khalidiya, Khalifa City and Al Ghadeer. A two-bedroom apartment in each location is available per annum for AED65,000, AED78,000, AED60,000 and AED52,000 respectively.
The capital’s villa market witnessed no obvious movement in rates compared to Q2. Al Raha Gardens was the anomaly, as it was the only community to witness a decline, particularly in the four and five-bedroom category where softening of 3% and 2% was felt respectively, with rates declining to AED160,000 per annum for the four-bedroom unit and AED220,000 for the five bedroom.
“This underscores the demand trend for more affordable rental options as tenants continue to downsize to save costs, particularly in this area,” added Witty.
Chestertons MENA offers a full range of property services, including residential and commercial sales and leasing, investment agency services together with property management, strategic consulting and valuation services.