Dubai – MENA Herald: Residential sales prices in Dubai remained stable during the second quarter of 2016, according to the latest Dubai Real Estate Market Overview by Abu Dhabi Islamic Bank (ADIB) and its real estate advisory subsidiary MPM Properties.
The off-plan residential market remains buoyant with the launch of over 4,000 new units (villas and apartments) spread across 20 projects. Around 70% of new launches were in the price range of AED850 -1,100 per sq.ft. with developers continuing to offer incentives, including post-handover payment plans helping to maintain healthy absorption rates.
Buyers remain cautious, with the highest demand for off-plan sales from reputed developers with proven track records of successful and timely delivery of properties.
During Q2 2016, average residential rents (apartments and villas) dropped marginally by 1%, with an equivalent year-on-year fall of 4%. Overall, the decline for apartment rents was comparatively higher in non-freehold areas at 5%, while freehold areas, despite increases in new supply, showed a 3% decline year-on-year.
Paul Maisfield, CEO of MPM Properties, said “With the launch of so many new units in Q2, there is no shortage of choice for buyers in Dubai. But with more people seeking to get onto the property ladder to achieve long term capital appreciation and relief from the vagaries of renting, the effect on prices is relatively neutral. While location is still a major factor, quality of product, incentives and payment plans are also factors which are driving demand.”
The prime office market remained stable throughout the last quarter, with no major changes from the previous quarter. However, ageing properties saw a marginal drop with the lower benchmark level dropping to AED90 per sq.ft as compared to AED100 per sq.ft. Strata office space owners are now accepting rents as low as AED 55 per sq. ft. per annum (all inclusive) in secondary areas such as Business Bay and Jumeirah Lakes Towers due to the rise in supply and prevailing high vacancy rates.
With the addition of 1 million sq. ft. of space, the total office stock across Dubai currently stands at 93 million sq. ft. Weak demand and low yields are resulting in conversion of some office space to residential or hospitality use. Around 355,000 sq.ft. of existing office space has been converted into residential use in the Dubai Silicon Oasis area which is slated for delivery in 2016.
Hotel performance indicators showed a drop in average daily rates by 16% quarter-on-quarter, whilst occupancy rates remained relatively stable at above 80%, which is high in comparison to other international markets.
Retail rental and occupancy rates remained stable across the Emirate during the quarter. However, retailers have started renegotiating lease terms with mall operators, reflecting the fall in sales that in turn is reducing profitability for retailers.