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- Can you give an overview of the high-end apartments in Dubai?
The prime-end segment in Dubai is seeing a significant reduction in transaction levels for high-priced properties, with Asteco's valuation team dealing primarily with re-mortgaged properties rather than actual sales within this segment. Despite Palm Jumeirah, Downtown Dubai, Jumeirah Beach Residence and Dubai Marina remaining amongst the most popular areas for high-income buyers, the reduction in global oil prices and sanctions currently in place on certain CIS countries have affected key source markets of high net worth individuals. As a result, most transactions in these areas are for mid-priced rather than premium properties. This was reflected in the benchmark development sales prices that saw declines of 5% since last quarter. Dubai Marina has witnessed the highest number of transactions due to its popularity, diversity of types, layouts and sizes that cater to all.
- What can we expect in terms of new supply for this market?
In terms of new prime-end supply, the Crystal Towers by Al Fattan Group in Jumeirah Beach Residence comprising hotel rooms, suites and residential apartments are expected to be completed by 2016. The development, featuring prime sea views and benefitting from its proximity to The Beach mall, the beach, several luxury hotels and The Walk retail strip, is expected to become popular both with buyers and tenants.
Other premium projects launched this year include Emaar's Downtown Views, which is a 55-storey residential building comprising 460 luxury apartment units expected by the end of 2018. The development also includes a nine-storey podium that is part of the ongoing expansion of The Dubai Mall. The podium features two storeys of residential amenities including a rooftop pool, a health club terrace, two storeys of dining and retail options, a grand entrance lobby at the lower level and more than 400 basement car parking slots.
- What is the situation in Abu Dhabi? What is the demand?
The prime and high-end apartment segment is relatively limited in Abu Dhabi and as such continues to achieve high occupancy rates, reaching 100% in the majority of apartments in the likes of Nation Towers, St. Regis Residences, Saadiyat Beach Residences, Al Bandar in Al Raha Beach, Rihan Heights and the Burj Mohammed bin Rashid. Rental rates have remained relatively stable in Q1 2015 as they peaked during 2014 with high-end projects under investment areas achieving the highest year-on-year rental growth. Similarly, sales prices recorded significant increases during 2014, especially during the first half, and have remained relatively flat in Q1 2015 with Saadiyat Island and Al Bandar still recording the highest rates per square foot driven by high demand for good quality finishes and proximity to the waterfront, and end-user interest in completed and self-sustained communities.
- How does the market for villas compare in Abu Dhabi?
Over the last 24 months, Saadiyat Island has established itself as the most sought-after location both for villas and apartments, leading to a large number of new launches.
These include villas at Hidd Al Saadiyat by Saadiyat Development and Investment Company and Saadiyat Beach Villas by Tourism Development & Investment Company (TDIC) as well as apartments in the Mamsha Al Saadiyat community, also developed by TDIC and expected for handover from early 2017 onwards.
Park View by Bloom Properties was launched during Cityscape 2015. The project is one of the first luxury projects launched in the Saadiyat Marina District, opposite the New York University campus. The mixed-use, high-end project will offer 234 residential units and 188 hotel apartments ranging from studio to two-bedroom units, and a wide variety of retail offerings, dining establishments, and modern amenities and facilities.
- Question of the Week: Can you provide an Abu Dhabi high-end property overview?
Prime properties in Abu Dhabi are relatively few. As such, they enjoy high levels of occupancies with very few units coming available for lease.
Asteco qualifies prime properties as developments that offer high-quality finishes, recreational facilities and amenities; are well managed with generally good views and good location; and tend to be part of a mixed-use development that includes hotels, offices and/or retail outlets often in a waterfront environment. Some of the most sought-after developments have a waiting list and, whenever a unit is available, tend to command higher market rents than the average.
With limited or no new prime properties expected for completion this year, rental rates in this segment are expected to remain high throughout the year supported by strong demand. Most of the existing prime projects are available for lease rather than freehold ownership, with the exception of Al Raha Beach's Al Bandar and Saadiyat Island's St. Regis Residences. Sales prices for non-branded prime properties start from Dh1,500 per square foot although units with these prices are rare, whereas branded units at St. Regis sell for a significant premium.
Several off-plan projects targeting the premium segment were launched in 2014-2015 including Mamsha Al Saadiyat and Al Maryah Plaza. Demand levels were good; however, pricing was key in unlocking demand.
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Source: John Stevens, Special to Freehold
The writer is Managing Director - Asteco
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