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- How has the market changed in recent months and what areas have seen increases in sales?
In our most recent report, Dubai Property Review 2014 Highlights & 2015 Outlook, a predicted softening of sales activity in apartments and villas in 2015 will be apparent due to upcoming supply.
The report also marked 2014 as a year of stabilisation with sales price increases of 4%, 1% and 9%, respectively for apartments, villas and offices. In a year of two halves, Dubai's residential sales market recorded moderate growth in the first half of the year, with significant slowdown in market activity and sales transactions in H2 2014.
Sales prices for apartments in 2014 showed a 7% increase compared with Q4 2013, but with additional supply on the way and ongoing macro-economic challenges, significant market growth is unlikely. Dubai Marina (including JBR), International City, Downtown Dubai and JLT had the most sales transactions in 2014.
- Please provide an overview of government legislation for the property market and its impact.
In the last 13 years, we have seen the evolution of legislation and a regulatory framework that has characterized the property market in the emirate.
The catalyst for the rapid growth of the real estate market in Dubai was the 2002 freehold law that permitted expatriates to purchase properties in designated developments. This helped put Dubai on the global real estate map.
The Ejari online tenancy agreement registration system introduced in 2010 gave both tenants and landlords another formalised step in the real estate process. This has helped balance the interest of landlords and tenants.
As the Jointly Owned Property Declaration law, also known as strata law, comes into effect, along with the requirement for registration of owners' associations (OA), this will provide legal standing to OAs and underpin homeowner rights.
- What about Abu Dhabi?
Despite demand levels being good, Abu Dhabi has relatively few upper-mid to high-end villa communities available especially on a freehold basis. As a result, the current occupancy rate is close to 100% in most developments, and a gradual increase in both rentals and capital values has been recorded in the last few months as prices have reached high rates in H2 2014.
Saadiyat Island is the only zone offering high-end villas for sale to all nationalities, making it one of Abu Dhabi's most sought-after villa developments, witnessing the strongest performance over 2014.
The newer phases of Al Raha Gardens such as Al Ward, Qattouf, Khannour and Lehweiah, offering freehold to UAE nationals, are still witnessing high demand with prices for four-bedroom villas ranging from Dh3 million to Dh4 million, whereas a five-bedroom stands at Dh5 million for Al Ward, the newest and most premium phase.
- Have the changes in property laws impacted those investing? One thing we saw in 2014 is market stabilisation, if not a decrease in pricing.
If you were at Cityscape two years ago, most of the properties were super high-end, very expensive luxury apartments and villas. Last year, it was all about affordability. The market is maturing and there are more choices now as Dubai continues to change and evolve. Undoubtedly, the future is looking positive.
The regulations are all there to try and control the growth and take some of the excesses out of the marketplace.
Asteco data shows that the stabilisation of both rental rates and sales prices is ongoing but this does not mean that prospective tenants will be able to bag a bargain in their preferred location. Rent increases will continue for very specific developments and products in line with demand and are contingent on the type of ownership structure.
- Question of the Week: What are the most popular upper mid-end properties in Dubai?
Arabian Ranches is one of the most established mid-end villa communities in Dubai with good levels of demand for leasing.
The development has attracted large numbers of residents that appreciate the quality of this self-contained community which features schools, retail and medical centres, sporting facilities and a golf course in an overall attractive setting. Due to the high levels of demand for the development, the developer has replicated the offering by adding new phases such as Rasha, Palma, Rosa and many others which were announced over the last year.
There is a good amount of completed stock in the mid-end villa market in Dubai, but with the addition of more supply in the medium term, sales prices seem to remain nearly stable with a slight decline in rates expected for the less-established communities.
Town Square is a newly launched mid-end development comprising 1,000 three and four-bedroom units expected for completion by 2017. A three-bedroom can be bought at less than Dh1 million whereas a four-bedroom can be had at Dh1.5 million with unit sizes ranging between 2,146 square feet and 2,423 square feet.
Besides that, nearly 1,400 villa units in Jumeirah Park and 500 units in Living Legends are expected to be handed over by the end of 2016.
Source: John Stevens, Special to Freehold
The writer is Managing Director - Asteco
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