Pace of decline for sale prices and rentals across Dubai’s real estate market slowed in the second quarter 2011, reflecting “signs of stability”, while Abu Dhabi continued to witness declines on back of oversupply, says a new report.
Apartment rents in Dubai fell two per cent after registering a similar decline in the first quarter, Global Investment House said. Villa rents remained stable without any significant declines after falling a mere percent in the fourth quarter of 2010.
Apartments in Downtown Dubai saw the maximum decline, falling eight per cent quarter-on-quarter while Dubai International Financial Centre dropping seven per cent on new supply. Overall, selling prices fell three per cent. Prices of villa in established areas continued to maintain their first quarter level, while larger size and/or new villas dropped three to five per cent.
In Abu Dhabi, apartments and villas rents declined at a fast pace, negatively affected by new deliveries. Apartment rents fell eight per cent after falling at the same percent in the first quarter and seven per cent in the fourth quarter of 2010. Villa rents, however, saw modest decline on selective demand for “ready to move in” properties, Global said.
In March, Rasmala Investments predicted that house prices in the UAE may drop by an additional 25 to 30 per cent as population growth stagnates and more properties are constructed. Jones Lang LaSalle estimates, home prices in Dubai will fall further as 54,000 houses comes onto the market between 2011 and 2015, while Abu Dhabi is expected to receive about 50,000 houses (16,000 will be ready this year) by 2014.
However, a senior Dubai Land Department official had told Emirates 24/7 earlier that Dubai is not likely to get more than 10,000 new units (residential and commercial) the year.
Offices ‘under pressure’
Office market remained under pressure in both the emirates on the back of persistent oversupply and “feeble” business demand.
In Dubai, office rents fell six per cent over the previous quarter with Dubai Investment Park registering a decline of 15 per cent while Jumeirah Lakes Towers dropping 12 per cent. City wide vacancy rates remained at around 45 per cent.
Office rents in Abu Dhabi dropped four per cent after falling nine per cent in the first quarter. Grades B and C offices are continuing their “underperformance” as tenants upgrade to better office space at affordable prices. Selling prices moved down three per cent, the report said.
In July, Craig Plumb, head of research, Jones Lang LaSalle (JLL) told this website it now estimates future office supply in Dubai to be around 1.8 million square metres, roughly 30 per cent lesser than they expected between 2011 and 2013. It earlier said Abu Dhabi will get an additional 1.2 million square metre of office supply before the end of 2012.