Michael Michael, Director of Landmark Properties
As Landmark Advisory predicted, there has been a solid rise in interest in residential sales across Dubai in certain established and prime residential areas such as Downtown Dubai and Emirates Living (Lakes, and Meadows). Moreover, over the past 12 months, the astute research and analysis division of Landmark Properties have observed three distinct submarkets emerging within Dubai’s residential market; prime, secondary and tertiary.
Michael Michael, Director of Landmark Properties explains, “Based on transactional data and third-party research, capital values continue to decline in tertiary areas with an imbalance between supply and demand. Markets such as Discovery Gardens and International City have witnessed the largest decline, while prime locations such as Downtown Dubai have witnessed the least”. According to Michael, the reason prime markets have performed so well is predominately due to minimal supply.
Across Dubai, apartment sales have declined by 2%, and, as Landmark Advisory expected, villas have continued to perform well due to the lack of forthcoming supply in 2011 – the result transpiring to a quarter on quarter increase of 2.8%. Commercially, the office market in Dubai remains oversupplied – with the current supply at 5.2m sq ft and another 2million sq ft to be delivered by 2014. To date, as market conditions continue to favour tenants with landlords’ willingness to provide incentives, capital values have observed a 1.7% drop.
Abu Dhabi’s real estate market continues to evolve as handovers take place in Marina Square and Sowwah Square. However, Landmark Advisory has noted that Dubai continues to have a negative effect on the Emirate’s assets. Michael states, ‘A decline of 3% has been witnessed across Abu Dhabi’s apartment rents as Dubai still plays its damming part”. He confirms capital values have declined slightly – 2% – even though few transactions have taken place. Therefore, it is predicted that over the next 12 months people will be drawn back from Dubai as rent prices and values continue to fall.
In regards to Abu Dhabi’s commercial market, Landmark Advisory has witnessed a decline of 4.2% in Grade A rents, with this decline expected to continue as more supply comes to the market. Michael finishes, ‘We predict that another 850,000sq m will be delivered over the next two years”.