Abu Dhabi property outshines DubaiWith real estate rising 16% year-on-year in Abu Dhabi, the market is outperforming Dubai, where secondary villa sales are slowing, says property website, Bayut.com
Abu Dhabi, not Dubai, is the latest star performer in the Middle East property market, says a top property website.
The rise in Dubai property prices has almost halved, falling from 11% a year from January to March 2014 to 6.5% a year in the second quarter, according to the latest figures from property website, Bayut.com.
But annual Abu Dhabi prices have climbed 16% in the first six months of the year, rising 7.3% quarter-on-quarter.
Bayut.com CEO Haider Ali Khan says the Dubai slowdown, especially in secondary villa sales, may continue and in doing so should put an end to speculation over a Dubai market bubble.
“While the property investors of Abu Dhabi may rejoice with the sixth consecutive quarter increase, the investors of Dubai should be rest assured that the slowdown in the emirate is for the better. The property market of Dubai is known to shine the brightest, but like everything good, it needs to be handled with extreme care.”
“By comparison to their remarkable 2013 numbers, residential options in Dubai have performed somewhat sluggishly so far in 2014. Abu Dhabi, however, successfully managed to post good numbers for the sixth successive quarter. Both emirates also welcomed new tenants and the rents in Dubai shot up as a result.”
Overall, the real estate sector of the UAE performed reasonably well in the first half of 2014, says Bayut.com.
“The prices continued with their upward trend but there was a general slowdown in the market as hot properties changed less hands this time around and market activity buoyed towards stability.”
Despite the modest start, and the slew of laws that proved to be quite effective, the apartments and houses of UAE, Dubai in particular, experienced controlled increases coupled with occasional strategic slowdowns.
Slow but steady escalations, controlled launches keeping risks of oversupply at bay, and the removal of the rental cap along with the return of government enabled Abu Dhabi to celebrate the sixth consecutive quarterly increase in Quarter2, 2014.
With the removal of the 5% rental cap in Abu Dhabi, rents in the emirate rose 2.9% on a quarter-to-quarter basis in Q2 2014.
Rental values seem resolute and unyielding, so average rents are unlikely to fall, especially in Dubai.
Higher valued properties in Dubai are seeing falling prices, but smaller property values are still rising. “Given that the ratio of smaller properties (apartments) to larger ones (villas) is tilted heavily in the favour of smaller properties, the overall increase percentage came out in the positive. Though the quarter-on-quarter drop wiped the smiles off many faces, it did manage to stabilise the property market and lead it towards safety.”
One area where there was increased demand were off-plan sales in Dubailand, which overtook Downtown Dubai as the second-most searched locality of Dubai in June.
Rising prices and rentals in Abu Dhabi and Dubai are driving tenants and home buyers to the cheaper options of Ajman, Sharjah and Ras Al Khaimah.
Although the residential options of Ajman and Sharjah are most favoured among people leaving Dubai, the clogged traffic during rush hours in these two emirates are making life difficult for those attempting to save some money by moving there.
Thanks to the new laws and regulations, the rapid change of hands of real estate also slowed down in H1 2014.
Sales volumes have exhibited a decline in almost all sectors recently, according to the Dubai Land Department, which reported that in May 2014, transactions came down by almost 50% as compared to the same time last year.
“It looks like the market is finally stabilising and the efforts of the UAE government have successfully steered it away from danger.”
Taiwanese developer Farglory, which is working on a luxury residential project on Al Maryah Island, is upbeat about the capital’s property sector.
Middle East Managing Director Jack Hu says, “Abu Dhabi is a demand-driven [market] and the speculative element in Dubai is something we as a newcomer to the region tend to shy away from. “The momentum of Abu Dhabi will pick up from the end of this year and next year, “the National website reports.
The developer’s US$1billion Maryah Plaza waterfront project, features three residential towers and one mixed-use tower with serviced apartments, a hotel, offices and shops.The first tower in Sowwah Square includes 144 one-, two- and three-bedroom apartments and penthouses, starting at Dh3,500 per square foot. Maryah Plaza is the only ownership residential project on the island.
While work on the project started in June, the main contractor will be named by the end of the year.The first tower is expected to be ready by June 2017, with the entire project complete by 2020 in time for Expo2020, Mr Hu says.