By Andrei Skvarsky.
Apartment rents and prices in Dubai and Abu Dhabi dropped in 2016 but the two emirates’ real estate markets have stabilised significantly, according to property portal and private company Bayut.com.
“Inflationary and haphazard overnight gains are quickly becoming a thing of the past,” the Dubai-based company said in an annual report. “For tenants, there could be no better time to seriously consider becoming a property owner [because of] reduced rental costs [and] affordable prices coupled with the easy payment plans.”
Dubai and Abu Dhabi “appear well-geared to make positive strides” in 2017, Bayut said.
The real estate market of the United Arab Emirates is, moreover, expected to receive a boost from preparations for the Expo 2020 world exposition in Dubai.
Bayut said in its report that 2017 “is likely to be the year when preparations for the Expo 2020 gain full momentum and when the engines of job growth, infrastructure development and economic prosperity are set to rev at full speed.”
“The overall UAE market is much more suitable for long-term indulgence,” Bayut said.
In 2016, rents dropped by six per cent in both of the UAE’s main emirates, Dubai and Abu Dhabi. The average apartment price in Dubai fell 11 per cent to 2.29m dirhams ($625,000) year-on-year, although prices in Abu Dhabi edged down by just one per cent.
In Dubai, the availability of new properties and people’s relocations from Dubai city to suburbs were some of the factors behind the general decrease in rents, Bayut argued.
Studio rents went down eight per cent to 57,000 dirhams ($15,500) per year in 2016 though rental yields were “attractive” at 7.4 per cent, the company said. Rents for apartments of four or more bedrooms also slid by eight per cent, closing at 305,000 dirhams ($83,000), but yields were just 3.5 per cent.
Prices for studios were five per cent down to 770,000 dirhams ($210,000) and those for apartments in the four-plus category plunged by 15 per cent.
In Abu Dhabi, studios were the category where rents recorded the largest decline of eight per cent, closing at an average of 58,000 dirhams ($15,800) but yields were relatively high, eight per cent.
Rents for four-plus apartments shrank by seven per cent to an average of 240,000 dirhams ($66,000) with yields of 5.2 per cent.
At the end of last year, Abu Dhabi authorities re-imposed a five-per-cent cap on rent increases for the residential sector even though rents in the emirate went down by six per cent during the year. The move had the declared purpose of protecting tenants from unjustifiable rental hikes by owners.
As prices in Abu Dhabi go, studios went down one per cent to 720,000 dirhams ($196,000) in 2016 while four-plus apartments were worth 4.65m dirhams ($1.27m).