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29 March 2024

Affordable communities rents down 10%

Discovery Gardens apartment values fell 8.9 per cent from the last quarter (AGENCIES)

Published
By Parag Deulgaonkar

Apartment rents in the lower end of the market fell eight to10 per cent in the first quarter compared to the last quarter of 2010, while new villa developments continued to face decline in capital and rental values due to lack of infrastructure, Cluttons said on Sunday.

“These emerging developments (Falcon City, Jumeirah Village, The Villa and Sports City) lack local amenities and community facilities, which is a deciding factor for prospective tenants and owner-occupiers before they invest.

The lack of these facilities contributes to the desirability and demand of such stock, which in turn cause values to drop further and puts additional pressure on the demand of some more known areas,” the global real estate consultancy said in its first quarter report.

Overall, villa units registered a reduction in value compared to the fourth quarter 2010 with villa developments such as Arabian Ranches, Meadows and Palm Jumeirah witnessing “little to no” movement over the last three months.

“This bodes well for the recovery,” Cluttons said.

Less desirable villa locations, such as Victory Heights and Motor City saw a moderate decline of 3.6 per cent compared to the fourth quarter 2010. “The villa rental market is expected to soften as we move into the summer,” the report added.

Apartment values continued to be eroded by the oversupply of stock with the lower end of the market witnessing the highest decreases.

Discovery Gardens and International City apartment values fell 8.9 per cent from the last quarter.

“Signs of a ‘flight to quality’ market shift continues to be apparent however, as units which are regarded as high end, in locations such as Dubai Marina, Old Town and Palm Jumeirah have seen drops of only 3.7 per cent from the end of 2010,” Cluttons said.

Rents continued to feel the pressure as tenants took advantage of the over supplied marketplace with average rents falling between eight and 10 per cent compared to the last quarter.

Last week, Rera CEO Marwan Bin Ghalita told 'Xpress' newspaper that 257 projects were under review, many of which were yet to even start construction.

Last month, he had said that 220 projects were going ahead and the market was witnessing.

Late last year, the agency said it had scrapped 202 projects since the global financial downturn and “more were expected this year.”

In March, Jones Lang LaSalle (JLL) experts said Dubai’s real estate market was likely to bottom out in the next one year.

“The office, retail, residential and hotel sector of Dubai real estate market is likely to bottom out by first quarter of 2012… they are very close to bottom.

However, Abu Dhabi will take another 12 to 24 months to reach bottom,” Craig Plumb, Head of Research, JLL Mena, had said. 

According to Cluttons, mortgage lenders are easing their lending norms and looking to garner a larger market share by offering more attractive rates to credit worthy clients purchasing the right kind of stock.

“The surfacing of the residential mortgage markets by a number of key lenders has continued to aid confidence in certain locations and developments.

Lenders are certainly  loosening their once ridged criteria as to which developments they lend on, as they feel the bottom of the market is drawing near,” the report said. 

 

Abu Dhabi rents fall 8% in Q1 - report

Rents in Abu Dhabi fell 8 per cent in the first quarter, signaling likely further decline this year as new supply hits the market, according to a report from property management firm Asteco.

Rents in the United Arab Emirates' capital have fallen 8 percent over the quarter across both apartments and villas, declining further from the 5 percent decrease of Q4 2010, the report said. quoted by Reuters.

"On the main island, turnover is slow within the lower quality buildings, where tenants are taking advantage of 'capped' low rental agreements," said Elaine Jones, CEO of Asteco.

"Among those that have become available, rents have reduced significantly and this is a trend we expect to become more pronounced," she said in a statement.

Rents had soared significantly in Abu Dhabi since late 2008 due to a housing shortage.

Abu Dhabi has been investing billions of dollars in industry, infrastructure and tourism to diversify its oil economy and this has been attracting thousands into the labour force, pushing demand for housing up.

Sale prices for villas have remained relatively stable over the last quarter, with many owners remaining naturally reluctant to sell due to market conditions, the report said.

On the apartment sales side, a wait-and-see approach dominates, as a result of ongoing uncertainty and negative outlooks in rental yields.

"Overall, investors remain cautious as they await stabilisation of rental prices," said Jones.

For those looking at buying homes, delays in handovers combined with mortgage financing difficulties are hindering transaction volumes. But imminent new property deliveries and UAE's improving economic performance will improve the situation, she said.