Sunday, August 20, 2006

Villas in Jumeirah and Umm Suqueim reign supreme

Notwithstanding the new freehold stock being added in its neighbourhood, the villas in Jumeirah and Umm Suqueim continue to reign supreme in the leasing marketplace. Already at record levels, these villa rentals showed further gains during the second quarter of the year and attested to their enduring hold in Dubai's real estate scene. At the end of the first six months, average villa rentals were hovering around Dh125,000 for a two-bedroom and Dh140,000 for a three-bedroom unit, according to the latest findings by Asteco.

According to John Allen, Director of Consultation, Research and Valuations at Asteco, "Villa prices in the Jumeirah area are likely to remain high despite new stock entering the market. As demand in these locations is high, rents are likely to continue to rise during the next half of the year."

There have been some suggestions that the handover of the units on The Palm Jumeirah will have some sort of impact on the Jumeirah property scene. The Palm handovers are scheduled to start from late November and stretching up to the first quarter of 2007. So, conceivably, their full impact should be felt from the second quarter of next year.

But Allen is certainly not one among those who believe that The Palm Jumeirah will crimp the leasing scene in Jumeirah. He explains why: "It is unlikely that these new villas will have a material effect on rents in the Jumeirah area as there are a high proportion of owner occupiers and limited supply of rental properties."

Elsewhere in the city, there were rental increases across the board, according to the Asteco findings. Rents in Deira, already on the higher side, are projected to go up further in the second half. The Al Ghusais area, where substantial new stock is being added, is witnessing rents that would have been unthinkable just three or four years ago.

[Article in Property Weekly]

Monday, August 14, 2006

High boomtowns are on the Middle East

Dubai is not the only boomtown in the region for investors in commercial property. Office rents in Abu Dhabi have more than doubled since 2002. In 2005, the average increase in rent across the city stood at 10 per cent, rising to an alarming 46 per cent in the first six months of 2006. The struggle to find commercial spaces continues with vacancy rates hovering around one per cent, according to research released by global commercial property marketing and research firm Colliers.

“The lack of prime-quality space is particularly marked. The quality of existing office stock is low with buildings throughout the city ageing and in need of upgrade.

“Prime buildings are generally reserved for the public sector, and with large domestic corporations tending to owner-occupy, the amount of space available to the private sector is relatively small,” Colliers said.

However new projects planned or under construction should improve the quality of available stock. “Planned projects indicate that approximately 500,000 square metres of office space will be added to the market between 2007 and 2011. This should satisfy current latent demand,” Colliers said.

With near total occupancy throughout 2005 and into 2006, office space is at a premium in Abu Dhabi. Colliers estimates that approximately 13,000 square metres of Class B supply will be made available to the market throughout 2006. The other boomtown in the region is Qatar. Like Dubai, almost 87 per cent of Qatar's real estate development is currently centred around the residential segment, and is driven by ownership and resale laws that allow foreigners to trade in property in designated areas.

In fact, similarities with the Dubai property market have prompted a recent research report to conclude that Qatar will be the next Dubai.

“Considering the economic boom that the country is currently experiencing, and the huge inflow of expatriates, supply is extremely deficient.

Sunday, August 06, 2006

Low cost housing availability in Dubai

The market for studio and one-bedroom apartments in the range of Dh25,000-Dh45,000 per year simply does not exist, according to a statement by Better Homes, one of the city’s leading real estate agencies. The company said it was swamped with accommodation requests for what is practically impossible to find in today’s Dubai market. Approximately two-thirds of calls received by Better Homes are from customers looking for low-cost studios or one-bedroom apartments. The severe market shortage has left many clients infuriated with the lack of available property in the city.

High rents have dominated the Dubai market for nearly four years, now taking up the lion’s share of residents’ salaries, in some cases nearly 70 per cent. Even existing budget accommodation in International City has seen dramatic rent rises. Initial rental estimates for a studio apartment were Dh19,000 but the market price sees them nearer Dh40,000. People earning up to Dh10,000 per month are the most likely to be hit the hardest by this shortage.

Completion of studios and one-bedroom apartments in new developments such as Jumeirah Beach Residence, International City and Discovery Gardens by the first quarter of 2007 is expected to take some of the pressure off from finding accommodation for bachelors in Dubai.