Tuesday, October 12, 2010

Affordable developments in Dubai gain strong foothold

The selling prices in several freehold communities across Dubai remained stable during the third quarter, in comparison to previous months, as per the latest report by Asteco, the property management company.

The third quarter report by Asteco Dubai, says that although further price adjustments are likely in the near future, affordable developments such as Discovery Gardens and Jumeirah Lake Towers (JLT) were priced at Dh.500 and Dh.750 per square foot respectively.

The report explained that Asteco has recorded an average drop of 6 percent for apartments. This is largely due to rapid increase in availability of apartments. But, there has also been an increased sale with owners who are likely to take handover of their units, but are unable to make the final payment, which constitutes large percentage of overall sales price.

This trend was also reflected in Downtown Burj Dubai, which, despite being at the opposite end of the price range, still commanded Dh.1,300 per square foot.

Although demand for townhouses and smaller villas is gathering pace, Asteco expects this to continue only in short-to-medium term. During the third quarter, properties in Jumeirah Island, Emirates Hills and the Green Community remained unchanged in terms of prices at Dh.1600, Dh.950 and Dh.700 per square foot respectively.

According to Elaine Jones, CEO of Asteco Property Management, there has been a change in focus in the real estate sector, as maximizing rental yields and long-term capital appreciation, has gained priority over short-term sale profits, with pro--ctive property management being a key factor.

The rental market in Dubai is favouring tenants. Despite an overall rental correction of 6 percent for apartments, the units in JLT dropped 2 percent, with 3 percent adjustments in Discovery Gardens and Downtown Burj Dubai.

The transaction numbers are usually at their lowest during summer and Ramadan. But, this time, it has been surprisingly active with several people taking advantage of the quiet months seeking value for money accommodation. Therefore, the drop in rentals is less significant during second quarter, the report explained.

Meanwhile, villa rentals have been slightly better, with average decline of 4percent from second quarter, following increased stock entry into the market in out-of-town developments.

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