The price of apartments, villas and commercial properties remained stable in Dubai in the second quarter of this year, compared to the previous three months with minimal reductions in villas across just two areas of the city, according to a new report by leading Dubai-based real estate management company Asteco.
The Asteco Q2 2010 Report said that no change was recorded in the sales price of apartments and offices, with flats in Dubai International Financial Centre (DIFC) and on Palm Jumeirah still commanding the highest prices.
“The market is, however, at a stage where pricing can vary from unit to unit in any particular property. We have noticed some overseas clients, who bought property on Palm Jumeirah, are prepared to sell at a much lower price per square foot as the exchange rate is more favourable without them incurring any discount,” said Elaine Jones, CEO, Asteco Property Management.
Villas, meanwhile, also remained on a par with the first quarter of 2010 in all areas except The Meadows and The Springs, where prices declined 5 and 6% respectively ‘mainly due to the large number of units available in the area, their age and the fact that owners who initially bought into this development at low launch prices, are in the position to reduce their asking price without making a loss’, said the report.
Palm Jumeirah villas remain the most expensive at AED1,800 per square foot due to its iconic water-front development, with the Green Community at the opposite end of the scale with villas selling for AED700 per square foot.
It was a different story on the rental side, however, as an increase in the number of units coming online in Dubai over the second quarter of 2010 forced prices down, providing tenants with the opportunity to move to better locations or larger properties. Overall, apartment rents declined an average of 8% compared to the first quarter of 2010.
Dubai Marina proved particularly popular with people previously living in Jumeirah Lakes Towers (JLT), attracted by the wealth of amenities. This movement then had a knock-on effect down the price chain as those in Discovery Gardens upgraded to JLT and people in International City looked for flats in Discovery Gardens.
Commenting on the trend, Jones said: “Although relocation trends from Abu Dhabi and Northern Emirates have slowed due to price correction in those markets, internal movement in Dubai is at its peak with tenants looking for upgrades in terms of quality, size or location. But there is an exceptionally broad range of prices, depending on the motivation of the landlord. As a consequence the rental market, especially for apartments, is very active.”
The report added: “Palm Jumeirah has also seen a significant amount of new supply with the handover of Marina Residences in the first quarter and the delivery of Oceana Residences in the second quarter of this year. This has put a strain on the already large inventory in Shoreline Apartments and Golden Mile. However, rental rates in Tiara and Oceana are above average due to the superior quality and exclusivity of the facilities (such as private beach, state-of-the-art health club, etc).”
Villas, on the other hand, fared better with rental reductions of just 4% on average across Dubai despite also seeing an increase in supply. Villas in Jumeirah proved the most resistant, seeing falls of just 1% thanks to its established community.
“The handover of developments such as Layan in Dubailand, the Cedre Villas in Dubai Silicon Oasis and the Shorooq Villas in Mirdiff inevitably put pressure on rents. Although these projects have limited infrastructure, facilities and landscaping, these properties attracted some people to move to take advantage of cheaper rents and larger unit sizes despite the lack of infrastructure,” said the report.
On the commercial front, the Dubai Q2 2010 Report found that rents still show a downward trend in office rents. Office inventory continues to enter the market especially in the new commercial areas of Business Bay, DIFC and Jumeirah Lakes Towers. The Sheikh Zayed Road area has experienced falls, but continues to remain a popular choice due to its easy access, established infrastructure and the opening of new Metro stations.
As more office blocks near completion “in developments such as Business Bay and JLT, this downward trend is likely to continue”, added the report.
But once again, while sales activity was stable with no price adjustments, JLT outshone all other areas with the development accounting for half of all transactions. However, Asteco believes proposed new laws could pave the way for future gains.
“The UAE moved a step closer to issuing a new Companies Law, which could allow 100% foreign ownership in some sectors. After a Ministerial Committee for Legislation approved the final draft in June 2010, the decree is expected by the end of 2010. This law is expected to boost confidence and increase interest in the emirates,” said the report.
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