The key real estate markets of Dubai and Abu Dhabi in the UAE witnessed an overall downward movement of apartment rents in the third quarter making them more affordable for the renters and buyers, said a report.

During the third quarter, a major factor that boosted the UAE real estate sector was the successful Cityscape Global exhibition held in Dubai, stated UAE real estate portal Bayut.

The highly anticipated event not only saw leading developers announce key real estate projects, it also helped rejuvenate the market and showcase the faith major players place in the realty sector of the UAE in general and Dubai in particular, it stated.

According to Bayut, Dubai South (formerly Dubai World Central), the 145-sq-km purpose-built city that includes Al Maktoum International Airport, appeared well set to become the next investment hotspot in the emirate, as ambitious project launches by developers such as Emaar hint at exciting times for the locality.

Although there has been consistent improvement in values in localities that are highly popular with renters and investors, there was an overall downward movement of apartment rents in Dubai compared to average values in the previous quarter, stated the property portal.

The average apartment rent in Dubai dropped to Dh125,000 ($34,020) per annum in Q3, down two per cent from the Q2 average of Dh128,000. The average yield for the quarter across all bed categories was calculated at 5.5 per cent.

Category-wise, studio unit rent was down two per cent in Q3. The units were being rented out for an average of Dh55,000  compared to their Q2 average of Dh56,000. One-bed apartments witnessed a greater drop of 8 per cent, with the average rent recorded at Dh92,000 compared to Dh100,000 in Q2.

The average rent of two-bed units recorded a slight 1 per cent drop in average rent, so did three-bed units, said the report.

The average rent for two-bed units was Dh144,000 in Q3, while that for three-bed apartments was recorded at Dh200,000. Average rent for 4+ bed apartments held its ground, falling a negligible 1 per cent in Q3 to Dh302,000.

According to Bayut, the average yield for studio units in the third quarter was six per cent, while that for one-bed units remained at 6.6 per cent. Two-bed units offered owners a rental return of six per cent and the yield for three-bed units was recorded at 5.5 per cent. The largest apartments, the 4+ bed category returned an average yield of 4 per cent.

The top localities for renting apartments in Dubai in the third quarter were Dubai Marina, Jumeirah Lakes Towers (JLT), Bur Dubai, Downtown Dubai and Dubai Silicon Oasis, while the best place for buying apartments was Dubai Marina, JLT, Downtown Dubai, Business Bay and Dubai Sports City.

On Abu Dhabi, Bayut said despite regional instabilities, the property market managed to ward off all turbulence and stood strong enough to be a buy-to-let heaven with rental yields averaging at 7 per cent and going as high as 8 per cent in certain bed categories.

Due to the limited residential supply, apartment rents remained stable throughout the first half, but compared with Q2, the UAE capital experienced a four per cent downward adjustment in the average apartment rent in this quarter.

Where tenants enjoyed the welcome affordability, Q3 also brought some good news for property investors. Compared to the previous quarter, apartment prices in Abu Dhabi increased 2.2 per cent in Q3 on average, it stated.

As per Bayut.com stats, the average studio rent in Abu Dhabi adjusted six per cent downwards to Dh56,000, while rental values of one-bedroom apartment also followed suit and came down six per cent to Dh90,000.

The rents in two-bed and three-bed apartments fell to Dh133,000 and Dh170,000 respectively, registering a drop of one and six per cent. The rents of 4+ bed apartments went up marginally over the Q2 average, fetching Dh242,000.

The property portal said average rental yields in Abu Dhabi remained lucrative as ever at seven per cent. Studio apartments offered an impressive average yield of 8 per cent in Q3, while one-bed and two-bed apartments returned yields of 7 per cent each.
The average rental yield of three-bed apartments hovered around the six per cent mark, while the 4+ bed category returned an encouraging yield of 5 per cent in the third quarter of the year.

The hotspots for renting apartments in Abu Dhabi were Al Reem Island, Al Raha Beach, Al Reef, Saadiyat Island and Al Ghadeer, while for buying apartments, the best places were Al Reem Island, Al Raha Beach, Khalifa City A, Al Muroor and Corniche Area.

Bayut pointed out that there was a clear slowdown in the drop in rental values in Dubai, which could be attributed to the market slowly recovering from the bigger drops in previous months.

The correction in rents could also be a result of a consistently growing set of tenants now looking to become homeowners by opting for numerous rent-to-own offerings by several developers, a phenomenon that has had an obvious effect on the rental segment of the market. The fall in the average apartment price in Dubai in Q3 compared to Q2 was significantly lower at 3.8 per cent, it stated.

Abu Dhabi on the other hand presents a mixed picture. Although the falling rents have made accommodation in the emirate more affordable, the strength of rental yields mean the units offer an equally lucrative proposition to investors.

The capital’s strong economy is keeping the realty sector buoyed, while growing opportunities for work make for a healthy rise in population, which in turn keeps the market going, said the UAE real estate portal.

Considering the host of project launches and persistent interest of local and real estate developers, it is safe to say the UAE realty sector is headed in the right direction and better times are around the corner, it added.-TradeArabia News Service