UAE adds 10,300 new units in Q1

dubai — The UAE’s real estate continued to witness strong supply of new residential units as 10,300 new villas and apartments were delivered in Dubai and Abu Dhabi in the first quarter of 2019, according to a report released by Asteco on Monday.

As a result of this new supply and increased in new project launches, rentals and property prices maintained their downward trend in the last quarter.

The regional financial hub of Dubai saw 6,700 units being delivered in last quarter — 5,800 apartments and 900 villas. But the balance is likely to shift during the year with 7,500 new villas expected to come online during 2019.

Surprisingly, the study found that project launches increased in Q1 2019 despite prevailing oversupply concerns.

Prominent launches over the first 3 months of the year included the Expo Golf Villas in Dubai South and Arabian Ranches Phase 3 by Emaar, and Central Park at City Walk and La Rive at Port De La Mer by Meraas.

Similarly, Abu Dhabi added 3,600 new units in Q1 including 2,800 apartments and 800 villas. It is expected that another 6,000 villas and apartments will come online by the end of 2019.

rentals

In Dubai, the study noted that apartment and villa rental rates continued their downward trajectory recording average drops of 11 per cent and 9 per cent, respectively compared with the same period last year.

Asteco study found that the number and range of incentives have increased with rent-free periods, now of up to 3 months, being the most popular.

“Others include the absorption of agent fees, lower security deposits and the inclusion of Dewa bills, maintenance or chiller

charges,” it said. For Abu Dhabi market, Asteco said that new supply combined with limited demand, coupled with economic challenges and bearish market sentiment continue to contribute to the downward trend in residential rental rates.

Apartment and villa rents declined by two per cent and one per cent, respectively, in Q1 2019, and seven per cent and five per cent over the year.

The highest decrease was recorded for mid- and high-end residential units as tenants seek more affordable opportunities.

Whilst incentives such as multiple cheque payments and rent-free periods have become a norm in the lower- to midend market, vacancy levels in many prime quality buildings increased significantly, as the discounts and incentives offered were insufficient to ensure yenant retention in a highly competitive market.

The trend in rental decline continued in the Northern Emirates as spillover effect.