The residential property market in Dubai witnessed solid growth in the second quarter with average rent increases of 6 per cent for apartments and 9 per cent for villas after a stable first quarter, said a report.

The sales prices recorded double-digit increases in three developments, with a jump of 6 to 8 per cent elsewhere, according to the latest H1 2012 report from leading UAE property management company, Asteco.

“After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes,” revealed Elaine Jones, the CEO at Asteco.

Rental rates for apartments were relatively stable through first quarter with minor declines in low quality/ poorly managed buildings in certain areas. Towards the end of H1 2012 rates in established quality communities achieved average increases of 6 per cent.
 
The apartments in Dubai Marina and Downtown Dubai were the most sought after in the emirate thus witnessing a 10 per cent increase, with a two-bedroom apartment fetching between Dh90,000 ($24,502) and Dh120,000 per annum.

“Tenants are relocating in search of value-for-money, one- and two-bedroom apartments as well as three- and four-bedroom villas are the preferred unit types. In terms of rates, quality well managed developments, will continue to set the pace,” explained Jones.

She pointed out that the leasing rates for villas too followed a similar trend, stable throughout Q1 2012 with an average increase of 9 per cent through the latter part of second quarter.

Mirdiff posted the largest increase with the rents for a three-bedroom house hitting Dh90,000 per annum, up 13 per cent from previous quarte. The double-digit (11 per cent) growth was also recorded in Arabian Ranches, with a three-bedroom villa now costing Dh140,000 per annum.
 
On the sales front, prices for one-, two- and three-bedroom apartments in Downtown Dubai, Dubai Marina, and Palm Jumeirah retained their popularity and witnessed price increases of 9, 8 and 8 per cent respectively during the first half, said the Asteco report.

Apartment prices elsewhere in Dubai remained relatively stable, with apartments in JBR seeing a 3 per cent increase.

Sales price increases for villas were dominated by Arabian Ranchers (16 per cent price increase), The Springs (14 per cent price increase) and Jumeirah Islands (11 per cent increase).

For all other developments in the report, prices increased by 6 to 8 per cent with the exception of Jumeirah Village where prices were stable. Prices per square metre now vary substantially highlighting the contrast in quality, facilities and infrastructure, the report added.
 
According to Jones, villas on the Palm Jumeirah are now the most expensive in Dubai at Dh17,200 per sq m, followed by Jumeirah Islands and the Meadows priced at Dh10,750 and Dh10,250 respectively. The lowest prices can be found in Jumeirah Village at Dh5,400 per sq m.

“Looking ahead to the 2012 year end, sales prices will continue to rise for quality developments, especially villas. The number of owner-occupiers rose steadily in line with improved financed options offered by banks, which we expect to continue,' she said.

'Further demand will also be evident from overseas buyers escaping economic woes in the Eurozone and political instability in other parts of the region,' Jones added.

However, it was a different picture for commercial space which, despite an increase in leasing enquiries in H1 2012 as the regional situation improved, creating renewed interest in Dubai as a hub for business, was hampered by oversupply and tenant-dictated contract terms.

Rental rates declined 6 to 8 per cent in areas such as Tecom, Bur Dubai and Business Bay. However, rates still vary between Dh2,370 per sq m per annum in DIFC and Dh430 per sq m per annum in Dubai Investment park.
 
“In terms of commercial sales, 2012 started off with minimal transactions for small units although Asteco has seen some purchases from local and international firms that have been successful in Dubai in the medium term, and sales prices have remained relatively stable as more supply entered the market,” said Jones.

According to Asteco, there has been some demand for 100 to 400 sq m units in Business Bay, JLT and DIFC, but investment in the office market is likely to remain flat throughout H2 2012. Average rates vary between Dh18,300 per sq m in DIFC to Dh5,400 per sq m in Dubai Silicon Oasis.-TradeArabia News Service