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Affordability continues to be key in the UAE’s residential sales market, with prices in Dubai dropping by 5 per cent year-on-year and transaction levels declining by 17 per cent. In Abu Dhabi, demand for both villas and apartments also levelled off whereas the northern emirates have witnessed increased investor interest, thanks to new launches.
The market has moved favourably towards the buyers as prices drop. Buyers are definitely considering their investment options as the market appears to be bottoming out and sellers seem prepared to take a more realistic view on pricing.
Areas in Dubai that have seen the most transactions are Palm Jumeirah, Dubai Marina and Downtown Dubai. However, apartment sales prices were down 6 per cent in Palm Jumeirah, and 4 per cent in both Downtown Dubai and Dubai Marina in Q1 2016. International City had the highest number of transactions in the quarter with 1 per cent increase in prices, further underscoring the demand for affordable housing. The International Media Production Zone and Jumeirah Village also notched quarter-on-quarter increases of 4 and 5 per cent, respectively.
The villa market experienced a similar trend, with sales prices down on average of 6 per cent compared to last year and 2 per cent when compared to Q4 2015. Buyer interest at the higher end of the market was limited and communities such as Jumeirah Golf Estates, The Villa and Arabian Ranches saw sales prices drop by 14, 11 and 13 per cent based on last year’s prices.
Newly launched properties with more affordable price points and payment plans are attracting investment interest and are selling very well. The reputation of the developer is also playing a major role as investors and end-users want to be certain that their properties will be delivered as agreed and the required infrastructure and facilities completed.
In Abu Dhabi, sales demand for both apartments and villas was stunted. The popular Saadiyat Island and Al Raha Beach recorded price increases of 2 and 6 per cent; however, these increases can be attributed to the limited available stock.
A lavishly exclusive lifestyle on Saadiyat Island
The other areas within Abu Dhabi to experience decreases in prices were The Gate Towers, Sun & Sky Towers and Marina Square on Al Reem Island which saw quarter-on-quarter decreases of 6, 5 and 6 per cent, respectively.
Villa transaction levels in Abu Dhabi were limited in Q1 2016, following strong demand throughout 2015 particularly in the more affordable communities like Al Raha Gardens and Al Reef. However, new launches on Yas and Saadiyat Islands are expected to generate reasonable demand due to lack of suitable mid to upper-end villa communities available on freehold ownership.
Sales for new launches, which slowed down in 2015, are expected to pick up once buildings come closer to handover. It is anticipated that this will more than likely be a 2017 scenario. The signs are already promising with Yas Acres, Saadiyat Lagoons District and Faya at Bloom Gardens, all launched in Q1 2016.
The northern emirates are also attracting strong interest, with a number of significant projects being planned and announced particularly in the tourism and residential sectors.
The Ajman Real Estate Regulatory Authority announced approximately 4,000 units were sold in 2015 totaling Dh11 billion and representing a 27 per cent increase in transactions taking place in 2014. Good quality, completed developments are attracting investors, with projects in Ajman and Ras Al Khaimah proving popular with Asians and Europeans as well as Kuwaitis, Saudis and Emiratis.
Source: John Stevens, Special to Properties
Managing Director, Asteco