High hopes for luxury market movement

Expert eyeJohn Stevens

Demand for high-end property in Abu Dhabi and Dubai over the last few months has been a mixed bag affair with a lack of availability and the 2014 peaking of prices resulting in fairly limited opportunities in the UAE capital, and investor/renter interest in a number of new up-and-coming developments characterising Dubai activity.

We are seeing interesting patterns in Abu Dhabi, with demand for top quality luxury villas extremely high, especially for Saadiyat Beach Villas and The Hills where sales prices currently range from up to Dh25 million and Dh35 million, respectively, and a five-bedroom home can achieve between Dh950,000 and Dh1.1 million rental per annum, respectively.

Occupancy of premium rental properties is virtually 100%, but secondary market sales prices have remained relatively stable over the last few months following the H2 2014 peak.

Topping the exclusivity list is the Nurai private island development. With just 40 beachfront and water villas and plot sizes of up to 33,000 square feet, it really is the crème de la crème of upscale property, with an up to Dh30 million price tag to match.

Investors on the lookout for a slice of exclusivity in Dubai are still attracted by the upscale Emirates Hills development at Dh3,200 per square foot.

The Palm Jumeirah is also holding its own and commanding Dh3,700 per square foot, especially for units on the outer frond edges and with city skyline views. Interestingly, we have also noticed a recent preference for Mediterranean-themed villas.

On the rental side, the relative affordability of the Jumeirah Islands community is appealing to tenants with larger-than-average housing allowances, with a four-bedroom villa currently averaging at Dh325,000.

On the radar is Jumeirah Golf Estates, with its golf course, lake and nature views, which is emerging as a desirable luxury alternative with considerable interest from prospective owner-occupiers.

Another up-and-coming location is the under-development Dubai Hills project located within the 2,700-acre Mohammed Bin Rashid City mega project.

High-end apartments in Dubai are not fairing as well in the current market and we have seen significant reduction in transaction levels with the majority of our time spent dealing in re-mortgaged properties.

Despite the ongoing popularity of locations such as Palm Jumeirah, Downtown Dubai, Jumeirah Beach Residence (JBR) and Dubai Marina, the drop in global oil prices and sanctions currently in place on certain CIS countries have affected key HNWI source markets.

If we look at new prime-end supply, the 2016-scheduled mixed-use Crystal Towers in JBR is expected to do well thanks to its prime sea views, proximity to the beach and access to high-end retail/leisure facilities.

In Abu Dhabi, where the prime and high-end apartment segment is relatively limited, occupancy levels are still maxed out in majority of locations but there is little or no movement in rental rates following the 2014 highs.

It is a similar scenario for apartment sales rates, which have remained relatively flat so far this year. In terms of hotspots, Saadiyat Island and Al Bandar still record the highest rates, achieving an average of Dh1,700 per square foot, driven by demand for good quality finishes, waterfront proximity and end-user interest in completed/self-sustained communities.

Looking ahead, with a number of launched projects due to come online from early 2017, including Hidd Al Saadiyat and Saadiyat Beach as well as apartments in Mamsha Al Saadiyat, Saadiyat Island is set to retain its popularity crown for some time to come.

Source: John Stevens, Managing Director, Asteco


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