The resurgence of the UAE’s real estate market continued in Q2 with some segments seeing double-digit growth in sales prices, according to property management expert Asteco. 

 

The villa rental and sales rates in Abu Dhabi and Dubai continued to surge, with sales prices in certain segments expanding by almost a quarter in the period under review, stated Asteco in its Q2 2021 UAE Real Estate Report. 

 

Abu Dhabi Residential and Office Real Estate Market

 

The report said that developers delivered approximately 2,070 apartments and villas in Q2 in capital, particularly within Yas Island, and several buildings in Al Raha Beach.

 

The report notes that more than 9,350 residential units are set for handover by year-end; however, some projects are likely to experience delays and spill over into 2022.

 

Apartment rental rates in the capital softened marginally (by 1%) over Q1. Annual declines, however, were more pronounced and averaged 8%. The report noted that mid and high-end properties were the most affected, with some units registering declines of between 10% and 15%.

 

The report indicated that villa rental rates recorded an average increase of 1% in Q2 2021, predominantly driven by the rise in interest for well-developed villa communities located on Yas Island, Saadiyat Island, and Al Raha Beach.

 

According to Asteco, tenant movement was dominated by residents looking to upgrade/upsize, with most shifting to villas and townhouses. The increased availability of units within the mid to high-end sector facilitated this move, it added.

 

Rental rates for office space in the capital remained constant in Q2 2021 from the first quarter, with landlords offering incentives such as flexible rent period, service charges waiver and/or reduced fit-out cost. Rates for offices in the capital saw an annualised drop of 4%, said Asteco.

 

Demand for completed villas for sale continued to rise over the quarter, particularly within the upper-end segment, mirroring the rental market. Villa sales prices increased by 1% on average in Q2 2021, predominantly driven by Al Raha Gardens and Al Reef, which recorded 6% and 2% sales growth rates, respectively, it stated.

 

Dubai Residential and Office Real Estate Market

 

According to Asteco, the second quarter saw approximately 6,650 apartments, 1,500 villas, and 750,000 sq. ft. of office space completed in Dubai, despite Covid-19 related restrictions.

 

Most Dubai communities recorded rental rate growth in Q2 2021, resulting in an average increase of 3% and 8% for apartments and villas, respectively. While average apartment rental rates remained in contraction at 3% compared with the same period last year, villa rental rates grew by a robust 10%.

 

Office rental rates continued their downward trajectory with quarterly and annual drops of 4% and 16%, in line with stunted employment/business growth. As a result, the report said, some landlords are looking at repurposing existing/upcoming office buildings.

 

Sales prices recorded a significant surge, particularly in the villa segment, with an average quarterly and annual increase of 16% and 23%. Apartment sales price growth was less pronounced, but still expanded at a robust 6% over Q2 2021 and YoY, stated Asteco.

 

However, the growth momentum experienced in the first quarter of the year appears to be slowing as pent-up demand resulting from the COVID-19 lockdown/restrictions is absorbed. However, Expo 2020 and the continued successful rollout of the vaccines and pandemic containment measures by local and federal governments are expected to maintain the positive sentiment, it added.

 

Al Ain and the Northern Emirates

 

Apartment rental rates across the Northern Emirates softened marginally with average declines of 1% to 2% over Q1 2021 and 6% annually.

 

Office rental rates in Sharjah remained unchanged over the second quarter of the year, with annual declines averaging 16%.

 

According to the Sharjah Real Estate Registration Directorate (SRERD), 40,364 transactions valued at AED12.2 billion were recorded in H1, up 40% compared to the same period last year. 

 

Most of those transactions occurred in the residential sector (49.6%), followed by commercial (37.1%), industrial (11.1%) and agricultural (2.2%).

 

In Sharjah’s master plan communities, apartment sales prices recorded a marginal increase of 2% on average, whilst the more mature GCC freehold areas showed signs of stabilising.

 

In Al Ain, apartment rental rates remained unchanged over Q2 2021 from the previous quarter, whilst annual drops were marginal at 3%. Villa rental rates softened by 1% over the last three months and 2% compared with the same period the year before.

 

While real estate market activity itself continued on a positive note due to active local tenant movement in search for value-for-money properties, elevated vacancy rates necessitated landlords to be flexible and offer discounts and incentives such as rent-free periods (up to 3 months) and flexible payment terms (up to 12 cheques), the report said.-TradeArabia News Service