(MENAFN- Khaleej Times) Estimated 19400 units in Dubai may weigh on rental prices and sales says ADIB.
The number of new projects in the Dubai market means properties will increasingly need to appeal to potential buyers' sense of value. KT photo
Abu Dhabi: Housing rents in Dubai are likely to face pressure with a flood of new supply coming to the market in the months ahead according to the latest ADIB Real Estate report.
“While the first quarter saw 2000 new apartments and villas added to the market the delivery pipeline for the rest of the year is an estimated 19400 units which will weigh on rental prices and sales and encourage developers to target more affordable properties” the report says.
Average apartment rents in Dubai rose one per cent quarter-on-quarter and five per cent year-on-year. Rents for villas meanwhile fell by five per cent in the first quarter in some developments. Residential sale prices broadly declined quarter-on-quarter though they remain generally positive on a year-on-year basis. Along with the abundance of new supply attractive mortgage rates and payment plans will contribute to what is becoming a buyer’s market. Rents remained stable in the first three months of the year.
“The number of new projects in the Dubai market means properties will increasingly need to appeal to potential buyers’ sense of value” said Paul Maisfield CEO of MPM Properties the real estate advisory subsidiary of Abu Dhabi Islamic Bank (ADIB). “That means a shift towards more affordable properties particularly close to the Expo 2020 site and an emphasis on incentives and unique selling points especially in the luxury segment. We expect buyers to benefit from these trends.”
The office segment had a strong start to the year with average grade-A rents gaining over 15 per cent year-on-year and occupancy rates improving. This is a positive sign for the market pointing to a limited impact from lower oil prices and the emergence of new commercial hubs such as Barsha and Tecom will continue as the government takes further steps to attract entrepreneurs and improve the ease of doing business. Meanwhile prime retail space in Dubai remains in high demand with rental growth of up to ten per cent during the first quarter.
The sector should remain robust with various initiatives to increase tourist numbers and the continuing development of convenience community and strip retail proving popular with local residents. An increase in five-star room supply and a drop in Russian tourist numbers took a toll on the hotel sector in early 2015 with revenue per average room (RevPAR) declining nine per cent in the first quarter compared to the same period last year.
However with the government focusing on expanding into new segments such as Islamic and film tourism and Chinese tourist numbers growing significantly the outlook is positive for the short to medium term. ADIB’s real estate market data and rental indices are collated from transactions within its portfolio of over 23500 units under MPM Properties’ management.
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