UAE property prices have more room to fall: Tasweek report

(MENAFN- Khaleej Times)UAE property market is set to sustain its performance after peaking in 2014 with operating conditions likely to temper performance.

Abu Dhabi - Residential real estate prices in the UAE are likely to undergo a five to 10 per cent correction after 18 months of sharp appreciation says a latest market report from Tasweek Real Estate Development for second quarter.

As per Tasweek’s Q1 report the UAE property market is set to sustain its performance after peaking in 2014 with operating conditions likely to temper performance.

The report adds that economic diversification favourable demographics and protective regulatory measures can effectively insulate the local market from any major crisis. Retail and commercial spaces are likely to be more resilient than hospitality given the sizeable supply of hotel rooms expected in anticipation of Dubai Expo 2020.

Masood Al Awar CEO Tasweek Real Estate Development and Marketing said: “The primary markets of Dubai and Abu Dhabi underwent price corrections in Q2 2015 that will most probably result in moderate upward market movements throughout the rest of the year. With global oil prices sharply declining since mid-2014 economic diversification has taken centrestage as the driver of growth in the UAE and across the region which will have a positive spillover effect on the real estate business. Given the recent market shifts the next half of 2015 will be an important indicator of how our industry will fare in the short to medium term as the UAE gears up for Expo 2020.”

Tasweek’s Q2 market research also showed that Abu Dhabi’s residential market sustained the Q1 trend of landlords protecting rental levels by reducing supply. Demand softened in Q2 though with the stable prices reflecting no changes over Q1. Overall rental prices were flat in Abu Dhabi island and in the outlying freehold areas.

Muroor Road offered the best rates for tenants with its studio and one- two- three- and four-bedroom apartments available at average annual rates of Dh57750 Dh68250 Dh84000 Dh126000 and Dh168000 respectively.

The Al Markaziyah residential area and Khalidiya also had good prospects while Hydra Village Al Reef and Al Raha Gardens posted the more competitive average villa sale prices.

Meanwhile residential rates have been falling in Dubai due to weak demand for luxury properties sliding oil prices and a stronger US dollar according to the report. On average sales prices in the emirate decreased by between five and 10 per cent compared to 2014. Average rents for studios and one-bedroom units fell three per cent although two- and three-bedroom rates rose from five to 10 per cent.

The best rental rates for apartments were found in International City while the lowest rates for rented villas could be had at Jumeirah Village.

Dubai’s office business for second quarter of 2015 saw a five per cent increase in prices. The number of new commercial licences issued was at the same level from the previous quarter thus increasing demand for office space.