The Dubai property market has experienced an “encouraging change" during the current quarter after the market had stabilised earlier in the year, according to brokers Chesterton’s.
“Price dropping is slowing down and the appetite of investors and owner-occupiers alike is showing signs of a recovery," Ian Hollingdale, Chesterton’s director of sales and leasing for Dubai, said at the company’s Market Talk event on Tuesday.
“The trick for all buyers is to know when to step into the market and not miss that bus. I think we can confidently say at the moment that bus is moving out of the terminal and you need to be on it."
He said that during the first three months of the year, the areas that had the highest transactions in value terms were Emirates Living, Dubai Marina and Palm Jumeirah. However, in terms of the quantity of units sold, International City, Discovery Gardens and Dubai Silicon Oasis were more popular as they offered higher yields.
“We perceive Dubai South and more locations in Dubailand being added to this list in the future."
Mr Hollingdale was bullish on the outlook for the remainder of 2016, stating that prices had yet to increase but rents were already bottoming out.
“We’re seeing a change in attitude from investors and owner-occupiers alike. Tenants are clearly weighing up the benefits of owning rather than renting, and banks are very keen to lend."
Abu Dhabi, by contrast, is currently undergoing upheaval in its leasing market as expats faced with higher living costs decide to head home as the school year ends, according to Chestertons’ director of agency for Abu Dhabi, Drica Rodrigues.
“It’s very interesting, the whole mood, at the moment in Abu Dhabi," said Ms Rodrigues. “We can see, through the school year ending, a little bit of exodus and a reshuffling in Abu Dhabi. Sales prices are going slightly down, rental values are also slightly down. It’s definitely a buyers’ market."
She said that capital values had been driven down by economic uncertainty and unemployment, which has led to an oversupply of units seeking long-term leases, particularly on Reem Island, where more towers are completing. As a result, many landlords are now prepared to offer shorter lease periods and payment for annual rent through three or four postdated cheques.
“Before it was only one cheque. Now, if you don’t do three or four cheques, especially in Reem, you’re going to have your unit empty for a while."
She argued the market was likely to remain subdued throughout 2016, with sale prices largely flat but declining at the luxury end of the market. Rents face the same dynamic, with “demand from the high-end expatriate segment expected to be weak due to cutbacks on company and government allowances".
Despite this, Ms Rodrigues said that a fall in rents was welcome given that tenants had to endure increases of up to 15 per cent when the rent cap was removed in November 2013.
Also speaking at the event, Daniel Xu, a senior legal consultant at DLA Piper, said the market for new real estate projects is likely to remain constrained because of a lack of liquidity in the sector.
“Developers are taking a ‘wait and watch’ approach. Stock is slowly being scaled back to adjust to slower demand."
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