There has been a steady drop in the villa and apartment sales and rental rates across the UAE during the first three months of the year, said a report by Asteco, a major regional and international real estate company.
In capital Abu Dhabi, approximately 1,600 residential units were delivered in the first quarter, with over 75 per cent located within the city’s investment zones including Yas Island, Al Reem Island and Al Raha Beach, it stated.
More than 7,300 residential units and 100,000 sq m of office space have been earmarked for completion before end-2018. However, previous delivery patterns suggest a number of these are likely to be delayed, spilling over to 2019, said Asteco in its ‘UAE Real Estate Report Q1 2018.’
The quarterly report also highlights key market trends, major project announcements and outlook for the remainder of the year across Abu Dhabi, Al Ain, Dubai and Northern Emirates.
John Stevens, the managing director of Asteco, said: "Tenants are increasingly taking advantage of the declining rents across the board, and choose to upgrade from apartments to villas or to better-quality and larger units. However, many remain cautious due to economic uncertainties or are waiting for further reductions."
"People are also moving from older to newer buildings, as these often include parking and other facilities that are non-existent or come at an extra charge in mature buildings," he added.
Asteco said among the key projects handed over in Abu Dhabi in Q1 were Ansam on Yas Island, Al Hadeel in Al Raha Beach and Al Muhaimat Tower on Al Reem Island, in addition to several stand-alone buildings in various locations.
According to Asteco, the most noteworthy announcement was Saadiyat Grove by Aldar and Emaar that falls within the framework of a strategic alliance between the two companies to develop local and international projects worth Dh30 billion ($8.1 billion).
Apartment and villa rental rates declined on average by 3 per cent and 2 per cent since Q4 2017, while recording annual decreases of 11 per cent and 9 per cent respectively.
Apartment sales prices remained broadly unchanged over the quarter, except for Marina Square (-5 per cent), Al Reef Downtown (-6 per cent) and Sun & Sky Towers (-6 per cent), said the Asteco report.
Villa sales prices were stagnant throughout the first quarter, with a slight decrease in Al Reef (-2 per cent). Annually, the highest decline in sales prices was recorded in Hydra Village (-8 per cent), followed by Al Reef villas (-5 per cent) and Raha Gardens (-4 per cent).
"The changes reported in these areas are a result of increased competition from new off-plan developments offered at attractive rates and favorable payment plans. Although healthy demand for high-quality, off-plan and newly delivered projects continued, lower-end residential units remained under pressure," remarked Stevens.
In Al Ain, although apartment rental rates remained broadly stable, villa rents decreased by an average of two per cent since Q4 2017 and 5 per cent annually. Annually, rental rates in Al Ain dropped the most in mature buildings (-7 per cent), followed by prime compounds (-5 per cent) and new buildings (-3 per cent).
Asteco said several buildings in the Town Centre and Asharej areas were planned for completion in Q2 2018. In addition, around 8,000 sq m of office space were handed over in the Senaya area, while no significant amount of residential supply was delivered in Q1 2018.
Stevens said: “Al Ain saw an increase in vacancies in the residential and office segments, mainly due to the reduction in staff housing allowances. This first occurred in 2016 and continues to have an adverse effect on the real estate market in the region.”
Following a period of relative stability (despite the overall subdued market sentiment), Al Ain’s retail rental rates have finally come under pressure due to reduced consumer spending, and limited business and employment growth, recording an average decline of 5 per cent in Q1 2018, he added.
Speaking on the market outlook in Dubai, Stevens said: “In 2018, we anticipate the delivery of approximately 30,000 residential units, however, as with Abu Dhabi, past evidence has shown that the actual completion rate is often significantly lower due to delays. Only 3,650 properties (12 per cent) have so far been handed over in the first quarter of the year.”
Most of the recent inventory is concentrated in the new investment areas along the Sheikh Mohammed Bin Zayed Road (E311) and Emirates Road (E611) corridors. Among established communities, Dubai Marina also recorded additional supply with the completion of the first of three residential towers at The Residences at Marina Gate, he added.-TradeArabia News Service