Considering the inflow of expats leading to the World Expo 2020, availability of affordable housing for the mid-income sector has become all the more relevant.
In terms of popularity and search trends, the market research tools of Bayut.com showed Dubai Marina to be on top of the list of the most sought-after localities for buying property in Dubai, followed by Downtown Dubai and Jumeirah Lake Towers.
Meanwhile, Abu Dhabi continued with its slow yet steady growth during the first quarter of 2015. With the residential units located in central areas enjoying sustained rental price growth, property options of suburbs such as Mohammad bin Zayed City, Khalifa City A & B and Mussafah gained popularity among price-conscious residents seeking affordable housing alternatives in the emirate.
Apart from the proximity to Abu Dhabi International Airport and Dubai, the increasing number of schools, community retail centres and reliable healthcare facilities are attracting more families to the suburbs of Abu Dhabi.
Other than that, the recent completion of new units on Al Reem Island may have limited impact on the prevailing residential rental rates as they are being delivered just two weeks ahead of Cityscape Abu Dhabi, a major property show expected to bolster residential demand. The number of new residential units being delivered is actually less than the new job opportunities being created in the emirate, and this may increase demand further.
DUBAI SALE ANALYSIS
Studio, 2- and 3-bed apartments in Dubai saw moderate to good rises in prices quarter-on-quarter, while 4-bed and 1-bed apartments lost value and saw lukewarm demand in Q1 2015. Studio apartments experienced a 3.64% quarter-on-quarter increase in prices on the back of strong demand and, according to Bayut.com’s stats for Q1 2015, the average price for Dubai studio apartments was AED 734,115.
Two- and 3-bedroom apartment prices increased 1.11% and 4.02% respectively across Q1 of 2015 in comparison to the same time period in 2014, with average prices in this year’s first quarter being AED 2,679,336 and AED 3,873,000, respectively.
Meanwhile, the prices of 1-bedroom apartments fell 2.77% year-on-year and settled on an average price of AED 1,523,300. Four-bedroom apartments saw a very significant drop in prices, with a total year-on-year decline of 12.60%, which affected average apartment prices in the overall analysis.
Collectively, apartment prices in Dubai decreased 5.76% on average in this year’s first quarter compared with Q1 of 2014, owing largely to dwindling demand for and decreasing prices of larger (4 and 4+beds) apartments in the emirate. The number of transactions also dropped 37.61% in a quarter-on-quarter analysis conducted by Bayut.com based on figures obtained from the Dubai Land Department.
MOST-SEARCHED LOCALITIES FOR RENT IN DUBAI
Dubai Marina
Downtown Dubai
Jumeirah Lake Towers
Dubai Sports City
Dubailand
DUBAI RENTAL ANALYSIS
Increasing rents across the emirate during 2014 has resulted in a higher interest in the affordable residential options of Bur Dubai and Jumeirah Lakes Towers. These two localities even broke the dominance of Downtown Dubai across the year as the second-most favoured residential location for renting in Dubai. Business Bay also saw a commendable increase in interest due to the speedy development of the Dubai Water Canal and conversion of office buildings to residential spaces.
This year’s first quarter brought along an increment in all apartment types, the largest of which was a 15.29% quarter-on-quarter rise in the studio apartment category. Rents of all the other apartment types saw a more controlled and gradual rise.
Expectations of an across-the-board decline in rental prices in Q1 2015 proved to be wrong, and the solid demand for residential units kept rents afloat in many localities while others did indeed lose in rental value. However, owing to the residential units expected to be delivered later in the year, a wider quarter-on-quarter rental decline is still expected once the new units hit the market.
Let’s have a look at how much rentals have increased in Q1 2015:
One-bedroom apartment rentals rose 3.39% quarter-on-quarter with average annual rentals going up to AED 101,667 from last year’s AED 98,333.
Two- and 3-bedroom apartments also saw a minor increase of 1.28% and 5.74%, respectively. Average rentals per annum in these categories are currently AED 158,333 and AED 215,000 in that order.
Four-bedroom apartment rentals increased 4.21%, quarter-on-quarter, going up to an average of AED 305,000 at the end of Q1 2015.
MOST-SEARCHED LOCALITIES FOR RENT IN DUBAI
Dubai Marina
Jumeirah Lake Towers
Bur Dubai
Downtown Dubai
Business Bay
ABU DHABI SALE ANALYSIS
With the exception of slight bumps here and there, the real estate market of Abu Dhabi performed considerably well and continued to strengthen throughout the first quarter of 2015. Despite the general forecast of sustained growth across all segments, the market saw a drop in the prices and rentals of studio apartments, depicting a shift of buyers and tenants towards more spacious residential offerings in the emirate.
According to the online database of Bayut.com, the prices of studio apartments across Abu Dhabi experienced a 6.15% quarter-on-quarter drop in Q1 2015. However, the prices of 1-, 2- and 3-bedroom apartments saw increases of 4.75%, 1.23% and 0.29% quarter-on-quarter, respectively.
The 4+ bedroom apartment category registered a quarter-on-quarter rise of 19.04% in prices to finish as the favourite among investors. Considering the mammoth increase, it can be safely said that buyers in Abu Dhabi have become more inclined towards bigger units.
According to Bayut.com’s search trend statistics, Al Reem Island, Al Reef, Al Raha Beach, Saadiyat Island and Al Ghadeer were the most popular localities among property buyers in Abu Dhabi. Owing largely to affordable prices, increasing rents, and new units in the pipeline, these localities secured the most enquiries for buying property in Abu Dhabi on Bayut.com.
In the residential pipeline, the City of Lights development in Reem Island has delivered the lion’s share of the new supply in 2015, adding 906 new apartments to the market in the first phase of its Hydra Avenue project. Further expected prime residential unit supply in the emirate also includes the C21 and C22 towers by Aabar Investments, expected to be delivered by mid-2015.
MOST-SEARCHED LOCALITIES FOR SALE IN ABU DHABI
Al Reem Island
Al Reef
Al Raha Beach
Saadiyat Island
Al Ghadeer
ABU DHABI RENTAL ANALYSIS
The residential offerings of Abu Dhabi continued with their upward trends in rentals during the first quarter of 2015. There was, however, a decrease in the rental prices of studio apartments, which coincides with the decrease in sale prices highlighted above.
The rest of the apartment categories experienced modest increases in rents during the first three months of 2015. Quality projects in free-hold areas, such as Khalifa City A, were the most sought-after and the occupancy rates were also seen to be increasing across all of their residential segments.
According to the online database of Bayut.com, rents of studio apartments in Abu Dhabi saw an average decrease of 11%, which is accounted for by the shift of tenants to more spacious options available in the emirate. One- and 2-bedroom apartments were particularly favoured among tenants, and this increased demand resulted in rental increases of 7% and 9%, respectively. The larger residential offerings such as 3- and 4-bedroom apartments registered comparatively marginal rental increases of 3% and 1%, respectively.
According to Bayut.com’s search trend statistics, in the first quarter of 2015 Al Reem Island, Khalifa City A, Al Raha Beach, Mohammad Bin Zayed City and Al Reef received the most searches from potential tenants. Al Reem Island features a host of affordable residential options, which is why it was top of the list. Residential units of Khalifa City A were favoured due to their suburban location and proximity to neighbouring Dubai.
MOST-SEARCHED LOCALITIES FOR RENT IN ABU DHABI
Al Reem Island
Khalifa City A
Al Raha Beach
Mohammed Bin Zayed City
Al Reef
FINAL ANALYSIS
With a substantial number of additional units (25,000) slated for entry into the UAE market throughout 2015, the residential sector is likely to feel some pressure. This may force owners to offer lucrative incentives to prospective tenants, like rent-free periods and special allowances in the form of reduced rental values, in order to keep their holdings relevant and competitive.
The residential sector also registered a quarter-on-quarter dip of 2% with respect to the rate of sale of units. Contrarily, office space rentals are expected to experience a consistent strong demand ahead of Dubai Expo 2020, especially those situated in various freezones.
The apartment rentals in Dubai exhibited fragmented growth patterns across various localities. It was observed that prime localities offering high-end amenities continued to generate interest and subsequently increase in rentals. On the contrary, residential communities located rather far from the city centre experienced declines, possibly due to the lengthy daily commute to work and other amenities and facilities. However, renewed infrastructure developments efforts by the developers may help reverse the prevalent downward trend.
Abu Dhabi is expected to continue with its sustained growth pattern in the residential market. With a limited number of expected units lined up and an increase in business and job opportunities, the emirate may see a subsequent rise in population of expats leading to a heightened demand. Stable growth trends are expected to continue even with the lack of interest in studio apartments among the residents. Investors with holdings in the suburbs of Abu Dhabi are set to see a period of increased interest as their assets continue to gain in popularity.
“We continue to see strong rental demand in prime areas and there are good bargains available in the market for investing in property. There is a healthy job market which continues to blossom and this bodes well for the real estate market in the years to come,” said the CEO of Bayut.com, Mr Haider Ali Khan.
