UAE rents move up; sales stable
dubai — A noticeable slowdown in the rate of property price drops and a visible uptick in average rental values in Dubai and Abu Dhabi in the last quarter off 2016 following months of continued downward movement will have a positive bearing on the real estate market that is constantly fine-tuning its way towards maturity, according analysts at a leading property portal.
“The upsurge in rental values and slowing down of price drops hint at the market edging towards stability following months of speculation over global issues such as Brexit and a liquidity crunch owing to low oil prices,” Bayut.com said in a report.
The report argued that the UAE offers a relatively stable playing field to global investors looking for capital value growth and superior rental returns amid fluctuations in regional and western real estate markets. “With the UAE economy having ably negotiated the oil price crunch on the back of its diversity, both Dubai and Abu Dhabi will continue to be regional real estate hubs and offer lucrative returns to anyone willing to have faith in their potential.”
However, some analysts appear to be not that bullish about the real estate recovery chances in the aftermath of the dramatic win by Republican Donald Trump as the next US president.
They argue that two prospects — bleaker chances of any imminent recovery in oil prices with the Trump administration expected to press ahead with shale oil production in redoubled vigour and the relentless rally in dollar — could impact the UAE real estate sector.
The UAE dirham’s peg to the dollar has been making property prices more expensive for investors and buyers from countries not linked to the greenback. Since the elections, the dollar has increased in value against the euro and the Chinese yuan.
According to Bayut, the average price for apartments in Dubai dropped by a paltry 1.2 per cent in October compared to the third quarter value, while the drop in Abu
124 Dh k average apartment rents across all bed categories in Dubai during October 2016
Dhabi was also significantly smaller at 0.7 per cent. Similarly, the average apartment rent in Dubai dropped by a negligible one per cent in October compared to the third quarter value, and posted an encouraging one per cent increase compared with the average rent in September. The average apartment rent in Abu Dhabi held its ground against the third quarter number, while some individual bed categories posted healthy surges in rates.
Such changes in both the rental and sale markets will have a positive bearing on the real estate market that is constantly fine-tuning its way towards maturity, said Bayut.
In Dubai, apartment rents across all bed categories averaged Dh124,000 in October 2016, exhibiting a one per cent increase compared with the September 2016 figure. Average yield for apartments in Dubai also improved by one per cent point to climb to 5.6 per cent, though the rental yield for individual categories went as high as 7.8 per cent.
In Abu Dhabi, the first three quarters of 2016 saw rents undergoing downward adjustments, making accommodations more and more affordable for tenants. However, the downward spiral appears to be nearing its end as the average apartment rent in Abu Dhabi rose by one per cent to Dh130,000 in October 2016 compared with the September price level. The rental average also stayed stable when against the third quarter value, while the overall rental yield remained at an attractive seven per cent, Bayut said.
— issacjohn@khaleejtimes.com