Masood Al Awar, CEO, TASWEEK Real Estate Development and Marketing
A detailed market intelligence report covering the first quarter of 2014 issued by TASWEEK Real Estate Development and Marketing shows average selling and lease price increases of between 10 to 15 per cent for real estate units in the UAE. This comes after reported highs of 35 to 40 per cent in the fourth quarter of 2013. This relative lull in the property sector is attributed to the continuous delivery of new units into the market as well as dramatic rise in prices after Dubai successfully won the bid to host the 2020 World Expo 2020.
“The UAE real estate sector has witnessed significant growth in the first quarter, particularly in Dubai and Abu Dhabi. This is in terms of asset prices, transaction volume and capital availability for refinancing, rescheduling and repayments. We have to note that international investor sentiments have improved globally with better returns compared to risk elements,” said Masood Al Awar, CEO, TASWEEK Real Estate Development and Marketing.
The emirate experienced relative stability in rental prices during Q1 2014 except in the high-end and freehold properties which continue to command a high percentage of price increase. In general, the Abu Dhabi realty sector looks forward to the launch of new mega projects announced last year in the city area and the Al Gharbia region.
In the residential segment, some areas have seen an increase in rents by almost 50 per cent soon after the Abu Dhabi Government decided to remove the minimum rental cap of 5 per cent. The prices in Q1 2014 continue to increase, however, at an average of 15 per cent particularly in luxury 1- and 2-bedroom apartment units. The selling prices have seen a slowdown in the same period, averaging 10 per cent after an increase of 20 per cent in Q4 2013. For tenants looking out for rented properties, the best deals can be found in Muroor Road, Al Reef, Hydra Village and Al Markaziyah; Al Reef and Hydra offer good options in buying.
The office property segment, on the other hand, saw a decline of between 10 to 15 per cent per sq m because of more supply of new office units than demand. Al Markaziyah, Muroor Road and Mohamed Bin Zayed City offer the best leasing options in Abu Dhabi.
The real estate prices in Dubai immediately leapt by an average of 20 per cent post the Expo 2020 win. However, the growth slowed down in Q1 2014 bringing the property prices to a more realistic level of a 10 to 15 per cent increase. According to TASWEEK, this trend will continue for the year as businesses wait for the government to announce projects related to the World Expo.
While Dubai’s residential property market has been on a boom, the leasing prices for office spaces, on the contrary, have been slower with a growth noted only in properties located in prime areas such as Sheikh Zayed Road which has seen the highest increase in leasing prices.
The best deals for residential rental properties can be found in International City, Dubai Silicon Oasis, Discovery Gardens and TECOM, while International City, Dubai Silicon Oasis, Dubai Investments Park, TECOM and Dubailand offer good buying propositions. In the office category, the best deals for buying as well as renting are available at Dubai Investments Park, Jumeirah Lake Towers, and Dubai Silicon Oasis.
The overall prospects for the UAE real estate market are bullish, according to Masood Al Awar who explains that growth is being driven largely by government reforms in the property sector supported by a booming economy. “Abu Dhabi’s upbeat market, combined with Dubai’s re-emergence as a leading global realty hub, will sustain the momentum that began in Q3 2013. The key drivers for enduring growth in the realty sector for this year will be transportation and infrastructure, safe returns over various asset classes, trustworthiness of the market, increased transactions, strong and continuous government support, and innovative and increasingly ‘smart’ technologies,” concluded Al Awar.