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Dubai's affordable properties in big demand

DUBAI, November 21, 2016

The pressure is mounting on landlords across Dubai as budget-conscious tenants continue to place emphasis on downgrading to smaller units or relocating to cheaper communities to get better value for money, said a report.

Apartments in Jumeirah Village Circle and Dubai Sports City saw rates increase by two per cent and three per cent respectively – the latter also recorded the highest growth over the year, averaging 13 per cent as demand for affordable housing increased, according to leading real estate consultancy Asteco.

The mid- to high-end segment also saw some movement, with Business Bay recording a five per cent decline due to new supply being handed over and budget-conscious tenants looking for alternatives, stated Asteco in its Dubai Property Review Q3 2016.

John Stevens, the managing director, Asteco, said: "Although rental rates have remained relatively stable this quarter we are seeing a definite shift to more affordable areas such as Jumeirah Village and Dubai Sports City where rents are cheaper and an increasing number of amenities are coming on line as communities reach critical mass.”

Apartment rental rates in Jumeirah Village ranged from Dh40,000 to Dh55,000 ($10,887 to $14,970) for a studio and from Dh125,000 to Dh165,000 for a three-bedroom unit.

In mid- to high-end areas such as Jumeirah Lakes Towers studios ranged from Dh55,000 to Dh75,000, while three-bedroom apartments were available from Dh120,000 to Dh180,000.

The high to luxury-end of the market with developments such as Downtown Dubai saw studios priced from Dh75,000 to  Dh105,000 while three-bedroom units varied from Dh175,000 and  Dh300,000, said Asteco in its report.

On the villa market, the property expert said the rents ranged from Dh130,000 to Dh185,000 for a two-bedroom villa in Arabian Ranches, Dh125,000 to  Dh160,000 for the same size in Jumeirah Village.

In The Springs, a two-bedroom villa is priced between Dh130,000 and  Dh145,000, for a three-bedroom the cost varies from  Dh165,000 and Dh220,000.

Villas in Jumeirah and Umm Suqeim too recorded a significant year-on-year decline of 19 per cent and 12 per cent respectively, which was attributed to substantial new supply and an increasing number of budget-conscious tenants.

"Given that tenants have a wide range of options to choose from, they are more likely to negotiate with their landlord; and if their requirements are not met, they will vacate. Whilst this was noticeable in Jumeirah and Umm Suqeim, this trend has spread throughout the wider Dubai market," pointed out Stevens.

“With more handovers expected in the next few months, we anticipate villa rental rates could come under further pressure,” he added.

After dropping nearly 20 per cent year-on-year, sales rates for apartments in Dubai Marina remained stable and it was a similar picture for DIFC, The Greens and JBR.

"With ample options available in the market, at various prices and attractive payment plans, buyers have significant choice. They also appeared to be better informed compared to previous years, as they researched their options, pricing, payment plans and developers’ track record," explained Stevens.

In terms of villa sales, interest was predominantly for more affordable and mid-priced units, typically priced between Dh2 to  Dh5 million. As a result, established communities such as The Springs and Mudon recorded 5 per cent and 1 per cent increases respectively over the quarter.

On the commercial office sector, Asteco said it saw a 24 per cent reduction in transactions compared to the previous quarter, although this was 12 per cent higher than the corresponding period last year.

On the leasing front, Ibn Battuta continued to perform well with rates from Dh145 per sq ft for small units and Dh85 per sq ft for larger shell and core space.

Land sales rates reached as low as Dh60 per sq ft on the GFA (gross floor area) in areas such as Majan, Jumeirah Village and Arjan.

"With more supply announced and due to enter the market over the next few months, there seems to be little potential for both rental and sales prices growth, except within select developments," said Stevens.-TradeArabia News Service




Tags: Dubai | demand | Asteco | villa | properties |

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