Construction & Real Estate

UAE's residential market robust in Q1, says expert

The real estate market activity in two of UAE's major markets - capital Abu Dhabi and Dubai - remained strong in the first three months of the year as a result of government initiatives, economic growth and improved market sentiment, according to property management experts Asteco.
 
On Abu Dhabi, Asteco said the residential market performed reasonably well with a total of 3,800 units being delivered in Q1 spread across different areas of Abu Dhabi including Al Raha Beach, Al Reem Island, Yas Island and Saadiyat Island and several other residential areas. 
 
The numerous residential and mixed-use projects located within the Investment Zones are expected to start construction in 2022 and a large majority of Abu Dhabi developers are now considering developing new residential and mixed-use projects in different areas of Abu Dhabi as a result of the general positive market sentiment, stated Asteco in its Q1 2022 UAE Real Estate Report.
 
The villa rental market continued to achieve good levels of demand across the board, particularly for the well-developed villa communities on Saadiyat and Yas Islands. 
 
However, there are still some discrepancies in the apartment market with positive and negative rental growth for various buildings within communities and across different areas, depending on the building’s age and quality, it stated.
 
Asteco pointed out that average villa rental rates grew by 2% in Q1 2022, with some developments recording increases of close to 10%. Average annual increases stood at 5%. Office rental rates remained stable over the first quarter, with a marginal annual decline of 1% on average.
 
When it comes to sales prices, residential sales market activity continued on strong footing in the first three months of the year with high levels of demand for new off-plan villa projects, as well as completed villas, particularly within well-developed communities.
 
Sales prices for high quality villas on Saadiyat Island and Yas Island increased by up to 4% to 7% over the quarter and up to 15% compared to the same period last year. Apartment sales prices rose marginally by 2% in Q1 2022 and 4% annually. High quality off-plan projects offered at attractive sales prices and payment plans generated the most interest, which translated into a higher number of transactions, it stated.
 
On the Dubai scenario, Asteco said new apartment supply picked up significantly in the first quarter with the handover of 6,250 units, compared to less than 4,000 in the previous quarter. However, the villa market lagged behind considerably with only 250 units completed and handed over.
 
The report also indicated that new supply for 2022 in Dubai is likely to fall short of earlier estimates. Delivery is now expected to reach a total of 29,000 apartments and 3,250 villas by year-end, with several projects likely to be delayed and to spill over into 2023.
 
The property expert said the new supply, current and future, is scattered throughout Dubai with deliveries in established communities, such as Dubai Marina and Business Bay, as well as in upcoming developments including Port De La Mer, MBR City, Dubai Hills Estate, Damac Hills 1 and 2. 
 
New project launches (off-plan, under construction and completed developments) continued to be well received by investors and end-users. 
 
When it comes to the leasing market in Dubai, rental rates across all major asset classes are expected to increase further for good quality properties, albeit at a slower rate. Average apartment and villa rental rates continued to grow in Q1, particularly in quality developments, with quarterly increases of 4% and 5%, respectively.
 
Villas continued to be the predominant focus of demand and the limited number of new handovers translated into higher rental and occupancy rates. Annual rental growth in the villa market was rather significant at 25%, while average apartment rental rates rose by 14%.
 
Office rental rates also grew by 4% on average over the last three months, although net effective rents may have been influenced by additional incentives. Annual changes stood at 6%.
 
According to Asteco, sales prices recorded a significant spike, particularly with regard to villas, with average quarterly and annual increases of 5% and 40%. The strong demand in villas has also impacted apartment sales prices, which grew by 5% compared to Q4 2021 and 22% over the year, it added.
 
On the Northern Emirates market, Asteco said the apartment rental rates improved marginally with average increases of 2% over Q1 2022 and 1% annually.
 
Sharjah office rental rates, for the first time in nearly 5 years, recorded positive quarterly and annual growth of 3% on average. Nonetheless, landlords will continue to offer incentives in the form of rent discounts and flexible payment terms, stated the expert.
 
Sales transaction activity in Sharjah, as well as Ajman, remained strong, particularly pertaining to the villa market. Sharjah apartment sales prices remained more or less unchanged over the last quarter and annual increases averaged 8%, it added.
 
According to Asteco, the real estate market in Al Ain remained relatively stable over the last six months with modest improvements in demand and activity across all sectors. 
 
Although average residential rental rates were broadly unchanged over Q1 2022, landlords continued to offer discounts and incentives including flexible payment terms. Annual changes were still adverse with apartment and villa rental rates softening by 1% and 2%, respectively, it added.-TradeArabia News Service