Friday, August 19, 2011

Northern Emirates record drop in real estate prices

The rentals and real estate prices in the Northern Emirates are continuing to fall owing to an oversupplied Dubai property market and due to uncertainty over future recovery, said CBRE (CB Richard Ellis), a real estate service provider and property consultancy.

The Head of Research and Consultancy in CBRE, Matthew Green, mentioned that the performance of individual emirates continue to fluctuate, with Sharjah and Ajman already beginning to bear the brunt of over-supply in Dubai.

Ras Al Kahimah and Fujairah are among the least affected emirates, as they depend largely on locally generated demand, rather than spill-over demand by Dubai, Green added.

According to CBRE report, the apartment lease rate for northern emirates have declined 17percent during second half of 2009, and a further drop (10 to 15 percent) in housing rents are likely over the next one year. The maximum declines are in Ajman and Umm Al Quwain owing to their proximity to Dubai and Sharjah, which have huge supply volumes and are facing drop in rentals.

The property market in northern emirates was flooded with subdued economic environment during the second half of last year, with little demand for office or residential properties. It is the single bedroom apartments in the northern emirates that have seen the maximum drop over the past year (20percent), followed by 16percent on two bedroom units and 14percent on three bedroom apartments.

The maximum decline in rentals were recorded in Ajman, which has witnessed a drop in lease rates by 25percent, followed by 21 percent in Umm Al Quwain and 20 percent in Sharjah. The average lease rates in the northern emirates were in the range Dh.17,000 to Dh.24,000 during second half of last year for single bedroom apartment, Dh.24,000 to Dh.31,000 an annum for double bedroom and Dh.29,000 to Dh.43,000 for triple bedroom apartments. Umm Al Quwain recorded the lowest rates.

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