Masood Al Awar, CEO of TASWEEEK
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TASWEEK Real Estate Marketing and Development, a leading property advisor and solutions provider, reports that rates were subdued in the major markets of Abu Dhabi and Dubai in Q2 2012 as new supplies continued to trickle in. This reflects TASWEEK’s earlier assessment that the markets could continue to be sluggish in the second half of the year. TASWEEK adds that trends will be decided by the two factors of financial obligation and investment returns.
Since the start of 2012 Abu Dhabi has been witnessing a steady influx of available residential housing, especially in areas outside of the city proper. Rental prices have consequently been on the downslide, especially in Mohammed Bin Zayed City where Q2 residential rates fell by as much as 5 per cent. Supply will continue to grow in the next few months with the completion of developments such as the rest of the Reem Island towers, the Corniche Road towers, mega-projects in the port area, and projects in the Abu Dhabi International Exhibition Center, among others.
Real estate companies are coming up with promotional offers and more building rental schemes especially geared towards residential tenants in anticipation of the foreseen sustained slide in sales and rentals.
Abu Dhabi’s office market inside and outside of the metropolis continued its slight decline, slumping to AED 1,200 per sqm per year on average. The rate for each sqm ranged from AED 750 minimum to AED 2,600 maximum.
Residential rates in Dubai continued to fluctuate between 2 and 3 percent in Q2. The prices of quality units in areas such as “Emirates Living” increased due to higher demand resulting from improved tenancy rates, rents and sales. Dubai Marina and Tecom have been stable since the last quarter, however. Locations such as Discovery Gardens and Silicon Oasis are still slumping due to the large supply of units and improvements on the living conditions of higher-quality areas.
Office sales told a similar story, posting minimal declines of 3 per cent on average as a result of low activity in areas such as Business Bay and the Dubai International Financial Centre which contracted by 7 and 6 per cent, respectively.
The primary markets of Abu Dhabi and Dubai continued to be tentative over the recent quarter. The results echo TASWEEK’s earlier pronouncement that surplus pressures and weak demand could extend the weak market performance to the second half of this year.
Masood Al Awar, CEO of TASWEEEK, explains that one of the reasons behind the slow recovery is the inconsistency of industry assessments by real estate experts, particularly in terms of prices and returns on investment. This complicates matters further for developers, investors and financiers. Masood says that despite the current obstacles, the market is bound to post slight improvements and be more stable through the end of 2012. By this time he expects more stable growth as market maturity sets in after a four-year slow down, with expectations of returns and profits to become more realistic.
Masood adds that mega projects to be introduced by the government will play key roles in the predicted rally, and that reasonable financing schemes provided by banks will provide stability across the real estate markets.