Wednesday, January 13, 2010
Dubai apartment and villa prices stable at year end
Dubai apartment and villa prices stable at year end
Led by Palm Jumeirah, lifestyle communities ‘weathering the storm,’ says Asteco report on Dubai property market
Sales prices for apartments and villas in completed developments across Dubai in general stabilised towards the end of 2009 with no change from the third to the final quarter, according to the latest report from Asteco, the largest property services company in the United Arab Emirates.
The latter half of 2009 also saw an increase in transaction activity as the economy picked up and mortgage availability improved, says the report on the Dubai residential and commercial property market for Q4 2009 published today (XX January 2010).
Of all the developments monitored, Palm Jumeirah fared best as it was able to hold values, the company said. “Lifestyle communities are weathering the storm and the Palm Jumeirah is an iconic development and, with continuous improvement of infrastructure and completion of residential and hotel developments, has become a sought-after destination,” said Asteco CEO Elaine Jones.
Other areas identified by Asteco as continuing to generate interest throughout 2009 include Downtown Burj Dubai, Dubai Marina, Jumeirah Beach Residence, Springs and Arabian Ranches as they offer lifestyle communities with easy access to retail, leisure, education and entertainment.
In 2009, the average sales price in Dubai stood at AED950 per square foot for apartments with a change of minus 16% since Q1 2009, and AED1,000 per square foot for villas with a minus 9% change since Q1 2009, says the report.
Business Bay and International City saw the largest decrease in apartment sales prices since Q1 2009 with 23%. Green Community and Palm Jumeirah prices remained stable with no change since the beginning of the year. However, the year-on-year change from Q4 2008 was minus 46%. The highest drop in prices occurred between Q4 2008 and Q1 2009.
In the villa market, Jumeirah Park experienced the highest drop in sales value since Q1 2009 with 34%, followed by Arabian Ranches with 29%, says the report. Palm Jumeirah and Springs, on the other hand, recorded positive growth with 20 and 21% respectively. Similar to apartments, price decreases were most substantial between Q4 2008 and Q1 2009. The average year-on-year decrease amounted to 49% since Q4 2008.
Dubai rental rates have declined by 24% for apartments and 18% for villas on average across the year of 2009, according to Asteco. Apartment rental rate decreases saw Palm Jumeirah with a minimal decline of 6%, in comparison, followed by International City with -15% since Q1 2009.
Villa leasing rates in Jumeirah and Umm Suqeim saw the highest drop with 30%. Palm Jumeirah was the only area that recorded an increase in villa rental rates of 4% on average due to the lack of availability as many owners bought property to live in or keep as a holiday home.
Compared with Q3 2009, the decline in rental rates slowed in the last quarter with overall decreases of 2% for apartments and 1% for villas. October saw rates pick up slightly but with the negative media attention Dubai received in November, rents fell once more.
“Sought-after developments include Downtown Burj Dubai, Palm Jumeirah and Dubai Marina as well as Arabian Ranches and Springs as they offer residents an abundance of retail and leisure facilities and are in prominent locations,” the report says.
The office sales market in Dubai saw limited transaction activity throughout 2009, the report adds. Sale prices also saw little movement in the latter half of the year.
The majority of buyers were said to include small private companies or individuals who looked for small units in finished developments at reasonable prices. In 2009, the majority of transactions were for units below the AED1,000 per square foot mark.
It was a similar picture in the Dubai office rental market which experienced no significant changes in the last quarter compared to Q3 2009. Enquiry levels declined slightly due to the holidays and companies delaying decision-making until the beginning of 2010, said Asteco. Developments that continue to generate interest due to location and quality include DIFC and Sheikh Zayed Road. However, market expectations and developer’s acceptance is often far apart.
Developers have begun handing over units in Business Bay to owners. “Many projects in the area incorporate distinctive features such as smart homes or offices, Oyster (Offices Yielding Superior Targets through Efficiency and Relaxation) and Green Building concepts which help to differentiate them from the competition,” the report adds.
“However, incomplete infrastructure and lack of support facilities hinder the leasing of units. Ultimately, complete infrastructure, ample parking, easy access to major road networks and excellent property management are vital for the take up of office space.”
In Q4 2009, the average gross rental rate for office space across Dubai stands at AED175 per square foot per annum, says the report. Rates decreased by 31% since the beginning of the year.
Tecom saw the highest drop with 48% since Q1 2009 due to the increased supply in the area. Deira, on the other hand, only decreased by 20% as the area remains popular; especially with the anticipated opening of three Metro stations in a five kilometre radius.