Despite various Q2 indicators pointing to a softer second half, the UAE’s real estate market managed to perform resiliently in Q3 2015.
Prices did not go down as significantly as expected except in some cases, with local consultancies now saying that the time is right for tenants to become homeowners given how equated monthly installments are falling below the monthly rental outgo. These were among the key findings of the latest market intelligence report from TASWEEK Real Estate Development.
TASWEEK reminds prospective home buyers that it is now mandatory to shell out 25 per cent as down payment for completed properties. The requirement is not enforced for off-plan properties, though, with the payment plan still dependent on the construction progress. This trend is expected to continue with stable prices over the final quarter. The company adds that the ongoing slump in oil prices may eventually affect the overall management of various expenses and have a trickle-down effect on the domestic economy that should be watched out for.
Masood Al Awar, CEO, TASWEEK Real Estate Development and Marketing, said: “We were pleasantly surprised with how the market performed against expectations this Q3. This sets the sector up for a good year overall as it slowly prepares for a stronger and better 2016. As our report noted in Q2, diversification, favorable demographics and a sound regulatory environment will continue to protect the UAE’s property business from any harmful market shifts.”
The capital’s residential market sustained the Q2 trend, with land lords continuing to protect rental levels via strict supply controls. Overall, Q3 prices did not change significantly in Abu Dhabi over the previous quarter.
The best annual apartment rental rates for Q3 were offered at Muroor Road, with prices of AED 57,750 (Studio), AED 68,250 (1-bedroom), AED 84,000 (2-bedroom), AED 126,000 (3-bedroom), and AED 168,000 (4-bedroom). The Al Markaziyah area also gave good rates of AED 57,750 for studio units and AED 78,750, AED 94,500, AED 136,500 and AED 189,000 for 1-, 2- 3- and 4-bedroom apartments, respectively. Average prospects at Khalidiya for studio (AED 63,000), 1-bedroom (AED 78,750), 2-bedroom (AED 99,750), 3-bedroom (AED 147,000), and 4-bedroom (AED 210,000) apartments were attractive as well.
The Al Reef community enjoyed the best annual villa rents, with 3, 4- and 5-bedroom units going for AED 130,000, AED 160,000 and AED 180,000, respectively. Al Ghadeer market prices were also enticing, with 3- and 4-bedroom villas offered at AED 150,000 and AED 170,000. “Khalifa A” also had competitive average prices for its 3- (AED 180,000), 4- (AED 220,000) and 5-(AED 250,000) bedroom apartments.
In terms of sales, the best-priced apartments per square feet were from Downtown Reef (AED 950), Al Raha Beach (AED 1,400), Marina Square (AED 1,450) and Saadiyat Beach (AED 1,450), while average villa sale prices were once again most attractive at Hydra Village (2- and 3-bedroom units for AED 1 million and AED 1.4 million), Al Reef (2-, 3-, 4- and 5-bedroom villas for AED 1.5 million, AED 2.1 million, AED 2.5 million and AED 3 million), and Al Raha Gardens (AED 2.5 million, AED 3.1 million and AED 4.5 million for 3-, 4- and 5-bedroom villas).
As for Abu Dhabi’s commercial market, demand remained more or less the same with not much business either established or closed down. The average rental price for high-end offices was at AED 2,200/sqft, while medium-quality offices fetched around AED 1,300/sqft.
Dubai’s residential prices remained stable overall, although the Dubai Land Department reported that transaction volumes dropped by 64 per cent compared to Q1 2015. Average residential transaction prices also declined year on year by 12.7 per cent.
The median transacted apartment price stood at AED 11,560 per sq m (AED 1,074 per sq ft) for Q3, while the median transacted villa price was at AED 13,024 per sq m (AED 1,210 per sq ft). The Dubai Marina retained its leading position in the Top 10 most trafficked areas, while Downtown Dubai and the Palm Jumeirah posted the highest apartment and villa prices, respectively. Dubai Industrial City is emerging as an affordable living cluster offering close proximity to the Expo 2020 venue.
Moving forward, an additional 26,100 apartments and 2,400 villas are set for completion by 2016, while 18 off-plan residential projects launched in Q2 will add 5,000 units to the residential pipeline by 2019.
“While TASWEEK already foresaw a solid year for industry, Q3 figures show that the UAE’s property sector is still ripe for growth and expansion behind strong market fundamentals and high consumer confidence. Our latest market intelligence points to an even better 2015 than previously expected which will serve the industry well as it gears up for more activity on the lead up to the country’s 2020 World Expo hosting,” concluded Al Awar.