Dubai real estate market reflected stability during second quarter 2011, with a slowdown in pace of decline of selling prices and rentals. Meanwhile, Abu Dhabi, continued to record declines, owing to oversupply in the market, said a new report.
The first quarter report by Global Investment House revealed that apartment rentals in Dubai fell two percent during the first quarter, while villa rentals remained stable without any significant decline than the mere percent in the fourth quarter of 2010.
The Downtown Dubai apartments, recorded maximum declines with eight percent fall quarter-on-quarter, while Dubai International Financial Centre recorded seven percent decline owing to new supply.
In Abu Dhabi, the sale of villas and apartments fell at a fast pace, owing to negative impact of surplus deliveries. While the apartment rents during the first quarter fell by eight percent, villa rents saw only a modest decline on certain “ready to move in” properties, Global said.
During the month of March, Rasmala Investments had already predicted that house prices in the UAE may fall by 25 to 30 percent, with stagnation in population growth, as more properties are being constructed. Further, according to Jones Lang LaSalle (JLL), the housing prices in Dubai will fall further, when another 54,000 homes will enter the market by 2014.
According to a senior official at the Dubai Land Department, Dubai is unlikely to get more than 10,000 new units, including residential and commercial this year.
As for office rents in Dubai, it fell six percent over the previous quarter, with Dubai Investment Park registering a decline of 15percent, while in Jumeirah Lakes Towers it dropped by 12percent.
In the Capital, however, office rents dropped by only four percent, following nine percent decline in the first quarter. However, the Grade B and C offices continue to underperform, as tenants begin upgrading to better office space at affordable rates.
The Head of Research at JLL, Craig Plumb, mentioned that future office supply in Dubai will be about 1.8mn square meters, roughly 30percent less than expected between 2011 and 2013. Meanwhile, Abu Dhabi will get an additional office supply of 1.2mn square meter by the end of 2012.