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Dubai residential sales
• Sales prices in the first quarter for villas and apartments increased by 6 per cent and 3 per cent respectively. The previous quarter's growth rates were unsustainable and prices in many areas reached a peak. While there were no declines, most established areas saw their prices stabilize, as buyers looked at opportunities within lower-priced communities with growth potential.
• Interestingly, many deals failed to transpire as sellers, with genuine offers, withdrew from deals as they predicted further growth. Furthermore, transactions were also slower in established areas as prices were beyond what buyers were willing to pay.
• The new law regulating the loan-to-value (LTV) ratios for mortgages was implemented, resulting in a higher cash requirement when purchasing a property.
• There has been strong demand from potential buyers for off-plan properties that have been very successful, through a combination of reasonable prices and attractive payment plans, despite the fact that more than 3,000 units were launched in the first quarter.
• Key off-plan projects include Mulberry Park Heights at Mohammad Bin Rashid City, Atria in Business Bay, BLVD Crescent and Boulevard Point in Downtown Dubai, Palm Tower Residences on Palm Jumeirah and Celestia Serviced Apartments in Dubai World Central. Significant villa launches include Yasmin and Rasha at Arabian Ranches, Mira Oasis at Reem and Trump Estates at Akoya.
• In terms of performance, apartments in Dubai International Financial Centre have shown the highest increases, with sales prices up by 9 per cent. This was due to the release of a significant amount of high quality stock, priced beyond existing rates.
• Similarly, villa sales prices rose by 6 per cent on average, with Al Furjan and Jumeirah Village witnessing the fastest growth rates of 22 per cent and 15 per cent respectively in the first quarter, as they were moderately priced.
• Conversely, rates in the more established areas such as Arabian Ranches, Palm Jumeirah and Green Community remained the same as in the previous quarter.
• Asteco anticipates that a continuation of the current trend this year, with moderate sales price growth forecast throughout the year.
Dubai office sales
• Office sales performance in the first quarter saw significant improvements, with increased transactional activity and an overall rise in prices.
• Business Bay outperformed other areas, with rates up by 23 per cent since the previous quarter, followed by Jumeirah Lakes Towers, which was up by 11 per cent.
• Transaction levels, however, remained relatively low as non-availability of mortgages for commercial property hindered deals from materialising.
• Apartment and villa rental rates grew on average by 5 per cent and 3 per cent respectively in the first quarter. These figures indicate that although market sentiment is positive, affordability is important for tenants. With minimal salary increments, further rent increases are likely to be unsustainable and could result in tenants moving to more affordable accommodation in the northern emirates, especially for the most price sensitive ones. Furthermore, with increased rental rates, many tenants are considering to purchase property to offset future rent increases. However, with the continued increase in sales prices and low-LTV mortgages, entering the property market has become a more expensive option.
• The areas that performed the highest in terms of rental growth in the first quarter were International City (11 per cent), Jumeirah Lakes Towers (11 per cent) and Dubai Marina (10 per cent) for apartments, and the Springs (13 per cent) in the villa market.
Dubai office leasing
• Office leasing in the first quarter performed well with an increased number of inquiries and completed transactions, especially for properties in Jumeirah Lake Towers and Business Bay. Both these areas are becoming more established and feature some available supply of single-owned buildings, which are in demand.
• A recurrent trend during the quarter was the extension of lease terms, often beyond five years, as tenants anticipated future growth and were keen to secure a lease agreement and secure their initial capital expenditure.
• Significant growth was witnessed in Dubai Internet and Dubai Media City due to existing companies expanding and new DMC-licensed companies taking up office space. Consequently, this has led to limited availability in the area.
• Fitted office space continued to be the preferred choice by tenants to the extent that many landlords have fitted out offices that were previously marketed as shell and core, with the prospect of attracting more interest.
Source: Property Weekly, gulfnews.com