Real estate market performs resiliently in Q3, price fall not drastic: Tasweek
The UAE’s real estate market managed to perform resiliently in the third quarter 2015 with prices not falling as significantly as expected, according to a new report.
Tasweek Real Estate Development said in its report that time was right for tenants to become homeowners, citing local consultancy advice, given that the equated monthly installments were below the monthly rental outgo.
Prospective home buyers have to pay 25 per cent down payment for completed properties, while banks are allowed to offer 50 per cent of the property value as home loan in off-plan properties. Flexible payment plans are being offered by developers, depending on the construction progress.
“We were surprised with how the market performed against expectations this quarter. 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,” said Masood Al Awar, CEO, Tasweek.
He, however, cautioned the ongoing slump in oil prices may eventually affect the overall management of various expenses and could have a trickle-down effect on the domestic economy.
The capital’s residential market sustained the second quarter trend, with landlords continuing to protect rental levels via strict supply controls. Overall, third quarter prices did not change significantly over the previous quarter.
The best annual apartment rental rates for the third quarter were offered at Muroor Road, with rates of Dh57,750 for a studio, Dh68,250 for one bed, Dh84,000 for two bed, Dh126,000 for a three bed and Dh168,000 for a four-bed unit . Renters could lease studio, one-, two-, three and four-bed units in Al Markaziyah for Dh57,750 pa, Dh78,750 pa, Dh94,500 pa, Dh136,500 pa and Dh189,000 pa, respectively. Average annual rates at Khalidiya for studio units stood at Dh63,000, one-bed at Dh78,750, two-bed at Dh99,750, three-bed at Dh147,000 and four-bed at Dh210,000.
Al Reef community offered the best annual villa rents, with three-, four- and five-bedroom units going for Dh130,000, Dh160,000 and Dh180,000, respectively. Al Ghadeer rates for three- and four-bedroom villas were at Dh150,000 pa and Dh170,000 pa, respectively.
In terms of sales, the best-priced apartments per square feet were in Downtown Reef (Dh950), Al Raha Beach (Dh1,400), Marina Square (Dh1,450) and Saadiyat Beach (Dh1,450), while average villa sale prices of two- and three-bedroom units in Hydra Village stood at Dh1 million and Dh1.4 million, respectively. Prices in Al Reef ranged from Dh1.5 million to Dh3 million, and Al Raha Gardens, from Dh2.5 million to Dh4.5 million, for three to five-bedroom villas.
Residential prices remained stable overall, although the Dubai Land Department reported that transaction volumes dropped by 64 per cent compared to first quarter 2015. Average residential transaction prices also declined year on year by 12.7 per cent.
The median transacted apartment price stood at Dh11,560 per square metres for the third quarter, while the median transacted villa price was at Dh13,024 per sqm. Dubai Marina retained its leading position in the top 10 most transacted areas, while Downtown Dubai and the Palm Jumeirah posted the highest apartment and villa prices, respectively.
An additional 26,100 apartments and 2,400 villas are set for completion by 2016, the report said, adding 18 off-plan residential projects launched in the second quarter will add 5,000 units to the residential pipeline by 2019.
“While already foresaw a solid year for industry, the third quarter 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,” said Al Awar.