Villa and apartment average prices in Dubai up 2% in the second quarter of 2012
27-07-2012
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The latest report from property consultants CBRE also shows that rents in popular locations such as Emirates Living and Downtown Dubai have risen between 5% and 8% in the same period.
But other locations have not done so well. In Jumeirah Village rents have fallen by 5% and in Dubai Sports City, Motor City and Business Bay they were unchanged.
The average cost of a villa has now increased 5% in the first six months of the year and CBRE says rates are likely to remain steady throughout the rest of the year.
‘Although there are major villa projects in the pipeline expected to enter the market in phases during the coming months, it is unlikely that this new supply will have a significant impact on lease and occupancy rates in established locations,’ the report points out.
However, new and emerging villa communities may initially see rise of competitive offers as investors look to avoid void periods amidst new supply,’ it adds.
The real estate market in Dubai is slowly recovering after prices plunged 60% in some locations since the peak of the market in 2008. But while residential house prices remain steady, the emirate’s commercial property market remains comparatively weak amid new supply.
‘Landlords of older properties within the CBD area are likely to struggle to maintain existing lease and occupancy rates moving forward, and this could result in average rents falling slightly after six straight quarters without movement,’ says the report.
A limited number of well located offices, however, ‘are likely to be able to command a notable premium and may see a limited upturn in rents in the medium term,’ it adds.
‘The regional transaction market is forecast to maintain its positive footing during the remainder of the year. However transaction volumes may be more constrained in the third quarter due to the slowdown during the summer and Ramadan wherein historically the Middle East’s markets remain subdued,’ the CBRE report explains.
While prime office lease rates are expected to remain stable over the next six months, offices in DIFC will continue to show further signs of a two tier market. ‘The DIFC market is likely to see mounting downward pressure on lease and occupancy rates, driven by an influx of strata owned space from private developers.
However, occupancy rates within the more popular DIFC managed office properties are anticipated to remain high as a reflection of the two-tier market that is now emerging within the project,’ it adds.
The number of residential real estate transactions increased 15% in the second quarter with the total value reaching AED7.1 billion with the average transaction value at AED1.2 million, according to data from the Dubai Land Department.
