(MENAFN- Khaleej Times) Tenants and buyers are in the driving seat across the UAE as both villa and apartment sales and rents have seen an annual decline across the board. Incentives such as multiple cheques, rent-free periods and the absorption of utility, maintenance or agent fees are becoming the norm.
John Stevens, managing director of Asteco, said tenants are increasingly taking advantage of declining rents across the board and choose to upgrade from apartments to villas or to better-quality and larger units. However, many remain cautious due to economic uncertainties or are waiting for further reductions.
"People are also moving from older to newer buildings, as these often include parking and other facilities that are non-existent or come at an extra charge in mature buildings," he said.
The annual rent declines in Dubai have been consistent in each quarter over the past year, averaging 10 per cent for both apartments and villas. Areas where apartment rents recorded the highest decline since first quarter of 2017 include Jumeirah Beach Residence (-15 per cent), Downtown Dubai, Dubai Marina and Deira (-14 per cent), followed by The Greens and Dubai Sports City (-13 per cent).
Similarly, villa locations that recorded highest drop in rents include Jumeirah Village (-15 per cent), Jumeirah Park (-13 per cent) and Arabian Ranches (-11 per cent). Moreover, the average apartment and villa sales prices softened by around one per cent in first quarter of 2018 while the annual decline for villas (6 per cent) was less pronounced than for apartments (9 per cent), particularly large villas with high price points generated limited interest.
Asteco estimates approximately 30,000 residential units to be delivered in Dubai in 2018, however, past evidence has shown that the actual completion rate is often significantly lower due to delays. Only 3,650 properties were handed over in the first quarter of the year, says the consultancy.
Most of the recent inventory is concentrated along Sheikh Mohammed Bin Zayed Road and Emirates Road corridors. Among established communities, Dubai Marina also recorded additional supply with the completion of the first of three residential towers at The Residences at Marina Gate.
Abu Dhabi
Apartment and villa rents declined on average by three per cent and two per cent since fourth quarter of 2017, while recording annual decreases of 11 per cent and 9 per cent, respectively.
Apartment sales prices remained broadly unchanged over the quarter, except for Marina Square (-5 per cent), Al Reef Downtown (-6 per cent) and Sun & Sky Towers (-6 per cent). Villa sales prices were stagnant throughout the first quarter, with a slight decrease in Al Reef (-2 per cent). Annually, the highest decline in sales prices was recorded in Hydra Village (-8 per cent), followed by Al Reef villas (-5 per cent) and Raha Gardens (-4 per cent).
Approximately 1,600 residential units were delivered in Q1 2018, with over 75 per cent located within the city's investment zones including Yas Island, Al Reem Island and Al Raha Beach. More than 7,300 residential units are earmarked for completion before end of 2018. However, a number of these are likely to be delayed, spilling over to 2019.
Al Ain
In Al Ain, although apartment rents remained broadly stable, villa rents decreased by an average of two per cent since Q4 2017 and five per cent annually, estimates Asteco. Several buildings in the Town Centre and Asharej areas are planned for completion in Q2 2018.
Stevens said: "Al Ain saw an increase in residential vacancies, mainly due to the reduction in staff housing allowances. This first occurred in 2016 and continues to have an adverse effect on the real estate market in the region."
Northern Emirates
Apartment rents in the Northern Emirates declined by 1 per cent on average since Q4 2017, while recording an annual decrease of 11 per cent. Further downward pressure is expected as the delivery of supply in Dubai directly affects the recovery of rates in the other emirates.
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