Residential rents in Dubai fell by up to 30 per cent in August, a real estate consultancy said yesterday, while it believed the marginal rent increases in certain pockets of the emirate were "unsustainable".
The maximum rental decline was seen in two-bedroom apartments in Palm Juemeirah, which fell 30 per cent in August. Two-bedroom apartments for rent in Jumeirah Lake Towers (Jlt, International City and Jumeirah Beach Residence decreased by 23 per cent, 17 per cent and 16 per cent, respectively. In the one-bedroom category, International City saw the maximum fall of 22 per cent, followed by Palm Jumeirah and JLT, declining 20 per cent and 19 per cent, respectively, Landmark Advisory said in its August 2009 Price Guide.
Four and three-bedroom villas in Mirdif fell 31 per cent and 26 per cent, respectively. The current market rents for a four-bed villa stand at Dh140,000 per annum in August compared to Dh202,500 in March, while for the latter it is Dh155,000 from Dh115,000.
"Demand for property was particularly strong during June and July due to a significant amount of rental contracts ending around this timeframe. The large amount of rents ending during the same period ultimately creates a temporary supply distortion following a period of particularly strong demand," said Charles Neil, Chief Executive Officer, Landmark Advisory.
He added: "The increasing rents can be attributed to a lack of supply – many landlords have removed inventory from the market to avoid renting out at current market rates, while others may be out of town during the summer period and consequently unavailable. We predict the month of Ramadan will also affect the leasing supply as many landlords are waiting until fourth quarter to reassess the market. "
Less than half of the 22,400 units have been delivered in Dubai by mid-year, Craig Plumb, Head of Research at Jones Lang LaSalle Mena had told Emirates Business. Earlier, JP Morgan estimated Dubai will have an excess of 31,000 units in 2009.
Rents in many areas of Dubai have decreased significantly over the past five months, but despite this, there are "exceptions" to this trend with some unit types in preferred developments performing well.
Apartments tuality in Dubai Marina have increased by 11 per cent for one-bedroom units and by six per cent for two-bedroom units, while three and four-bedroom villas for rent in Arabian Ranches and three-bedroom villas for rent in Palm Jumeirah returned to March 2009 rents or have increased marginally.
"Although there is rising rents for one and two-bedroom apartments in Dubai Marina, the rents for studios and larger three and four-bedrooms apartments have declined. These rental trends are, of course, highly correlated with emerging demand patterns. Preferred areas and unit types will be the first to recover in terms of rents. Tracking these specific units over the past five months indicates that rents in these areas are sustainable.
"These findings are in line with our third quarter Dubai and Abu Dhabi research report, which showed that one and two-bedroom apartments and three and four-bedroom villas were the most sought after unit types in the leasing market," Neil said.
According to Landmark research, relocation demand is continuing to drive the leasing market with demand still coming from Abu Dhabi and Sharjah as well as from within Dubai. A continued upgrading trend is also evident with location, quality and size being the key factors for relocation demand.
Most residential areas in Dubai are subject to further fluctuation, especially as new supply comes onto the market in the next 12-24 months, the consultancy said.
"If rents do come down further for these areas then we expect additional relocation demand as long as landlords adapt pricing strategies. Of course, this relocation demand will help to mitigate any further rental declines," said Neil.
According to Jones Lang LaSalle, rents have declined by 15 per cent in Q2 compared to Q1 and "will fall further" in the third quarter.
Showing posts with label Property for Rent. Show all posts
Showing posts with label Property for Rent. Show all posts
Monday, August 24, 2009
Tuesday, June 30, 2009
Large 2 Bedroom Garden Apartment in Uptown Mirdiff for Rent
A large 2 bedroom apartment in Uptown Mirdiff for rent. A new development near the airport and within close proximity of all the shops of the Uptown Area. Rental Price: AED 105,1000.00
Please Contact: Provident Estate
Tel: 04-3233609
E-mail:david@providentestate.com
info@providentestate.com
rentals@providentestate.com
Friday, June 26, 2009
Oversupply in Dubai residential market expected to keep real estate rents low
Property rents in Dubai are expected to continue falling this year with the oversupplied residential apartment sector likely to see the steepest falls.
The third quarter will see further falls but it is hoped that prices will stabilise after that, according to the latest report from real estate consultants Landmark Advisory.
There is also hope that the sales market is stabilising. Distressed sales opportunities are largely finished, as sellers refuse to lower existing prices, the report claims.
In some cases, buyers are paying increased rates for sought-after residential developments with limited homes available, according to the transaction-based reference map.
'Smaller villa developments with a limited supply that have tapped into sufficient value recognition among end-users with regards to location, layout, build quality and amenities/facilities are among those residential developments experiencing price increases,' said Jesse Downs, director of research at Landmark Advisory.
Landmark said apartments had experienced a steeper fall in rental and sales prices than villas, and that this would continue to be the case.
The combination of the economic downturn and the completion of a large number of high rise apartments last year have resulted in an oversupply in that segment, the report said.
Meanwhile rents in Qatar are expected to rise over the next year as units from the $14 billion real estate The Pearl hit the market and fuel demand. Properties in Qatar are also expected to hold their value well compared to other GCC countries, according to property broker LifeStyle Homes.
'While the initial panic created by the economic crisis led to selling of some properties, the value of high quality projects in Qatar are expected to remain higher as opposed to the rest of the GCC countries,' a spokesman said.
Dubai Property Rental | Properties for Rent Dubai
The third quarter will see further falls but it is hoped that prices will stabilise after that, according to the latest report from real estate consultants Landmark Advisory.
There is also hope that the sales market is stabilising. Distressed sales opportunities are largely finished, as sellers refuse to lower existing prices, the report claims.
In some cases, buyers are paying increased rates for sought-after residential developments with limited homes available, according to the transaction-based reference map.
'Smaller villa developments with a limited supply that have tapped into sufficient value recognition among end-users with regards to location, layout, build quality and amenities/facilities are among those residential developments experiencing price increases,' said Jesse Downs, director of research at Landmark Advisory.
Landmark said apartments had experienced a steeper fall in rental and sales prices than villas, and that this would continue to be the case.
The combination of the economic downturn and the completion of a large number of high rise apartments last year have resulted in an oversupply in that segment, the report said.
Meanwhile rents in Qatar are expected to rise over the next year as units from the $14 billion real estate The Pearl hit the market and fuel demand. Properties in Qatar are also expected to hold their value well compared to other GCC countries, according to property broker LifeStyle Homes.
'While the initial panic created by the economic crisis led to selling of some properties, the value of high quality projects in Qatar are expected to remain higher as opposed to the rest of the GCC countries,' a spokesman said.
Dubai Property Rental | Properties for Rent Dubai
Sunday, June 21, 2009
Demand picking up for Dubai Property
Prices of apartments in master developments such as Dubai Silicon Oasis, International City and Discovery Gardens have stabilised in the past three months, making them "affordable" for middle income earners in the emirate, according to real estate agents.
"The most affordable areas in the emirate are Dubai Silicon Oasis, International City and Discovery Gardens, where prices have levelled off in the past three months," said Vineet Kumar, Head of Sales-Dubai, Asteco Property Management.
According to Gowealthy. com, apartments in affordable housing projects have recorded a marginal drop of about five to 10 per cent in the past quarter. In International City prices for a studio, one-bedroom and two-bedroom apartments were about Dh290,000, Dh475,000 and Dh578,000, respectively, during the first quarter of 2009. The current prices for these properties stand at Dh275,000, Dh450,000 and Dh550,000, respectively, reflecting a decline of roughly five per cent since the past quarter, said Parvees Gafur, Executive Vice-President for International Sales, Gowealthy.com.
Prices stabilising
Mohanad Alwadiya, Director, Harbor Real Estate, said prices in affordable housing are now stabilising but there is an increasing demand.
"In Motor City, the residential apartment prices were about Dh900 a square foot in the second quarter of 2008 and is now about Dh600 per square foot. In International City, the average price per square foot has dropped from Dh830 in the second quarter of 2008 to Dh600 in the second quarter of 2009. In Discovery Gardens prices were Dh1,050 per square foot in the second quarter of 2008 and are now about Dh650 per square foot," he added.
From a rental perspective, Rose-Marie Kilzi, Leasing and Resale Director at Great Properties, said Discovery Gardens, International City and Springs villas continue to offer the cheapest rental rates in Dubai.
"A one-bedroom apartment in Discovery Gardens is currently in the range of Dh55,000 to Dh65,000 per annum. For a two-bedroom villa, the Springs is the cheapest rental property going for Dh100,000 per annum upwards. The rents have stabilised over the past three months," she said.
According to realtors, mortgages are easier to find for affordable housing units with banks generally lending at around 75 to 80 per cent loan-to-value ratio (LTV).
Alwadiya said most banks are offering mortgages on finished properties or those that will be ready within the next 45 days. The LTV ratio is still hovering around 75 per cent on average at an interest rate ranging between nine to 11 per cent, he said.
"Some banks are even offering mortgages on some off-plan projects," he added.
Asteco said mortgage availability on finished properties hovered around 75 to 80 per cent of the assessed value of the property.
"Four banks are very actively providing mortgages including HSBC, Abu Dhabi Commercial Bank, Dubai Islamic Bank and RakBank," said Kumar.
No oversupply risk
Analysts said people with incomes starting from Dh20,000 per month upwards were able to buy affordable housing in Dubai. They all said there was no risk of affordable housing becoming oversupplied in the market due to demand not yet picking up very strongly and the fact that a number of properties are yet to come into the market.
Kumar said: "Affordable housing supply is limited. The market has more projects on going, which are mid-market to luxury. The only affordable projects built so far are International City and Discovery Gardens. What has happened with the correction is that a lot of the finished projects have now become affordable and end users are taking advantage of this correction."
Alwadiya said: "We are witnessing an earlier than expected recovery signs in the market today that will help enhance and boost the demand on property. Affordable projects will benefit first and most during the early recovery stages, which will ease the pressure on the supply of such projects."
Gafur believes supplies are not pouring into the market as expected or predicted earlier last year.
Also, considering existing units and their expected delivery dates, it is still not enough to meet the entire demand for affordable housing from both a sales and rental perspective.
"Current demand levels may seem a bit lean due to various factors such as summer holidays, price drop expectations etc. But the latent demand for affordable housing is still quite strong and it is just a matter of time and initiation of positive factors such as increased lending before the demand levels show a visible upward trend again," he added.
Demand picking up
According to agents, demand for affordable projects is picking up as buyers are continually seeking to take advantage of the low prices.
"Demand on affordable residential assets is exceeding demand on affordable offices. This is mainly driven by the fact that the number of ready affordable residential projects exceeds the number of ready affordable office projects today," said Alwadiya.
Kumar said the demand for affordable residential units was higher than affordable commercial properties in Dubai.
"Demand is for locations that are established in terms of infrastructure and buyers prefer to be closer to such areas. It is difficult to put a number but the market sentiment is high for affordable housing projects," he added.
Since affordable housing developments have so far been attracting bachelors/ single families, the developments are not fully equipped with community facilities and amenities, said Gafur.
"The developments are not fully geared to provide all the support elements such as groceries and other shops. Once these services are up and running fully, a wider and general audience will consider buying into these properties and drive demand levels much further."
No major defaults
Analysts said there were no defaults arising in the affordable housing sector.
Alwadiya said: "The rate of influx of population to the emirate still exceeds the rate of departures and if we examine the profiles of the inflowing and outflowing population, we will notice that most of the departures were from the blue collar population who were forced to leave because of the slowdown in the construction sector. On the other hand, the influx has been fuelled by white collar or investor population."
Gafur said: "We have not noticed major defaults on payments across the affordable housing sector mainly because the developers have started to adopt flexible payment schedules."
"The initial panic mode that did prompt a few from even the affordable housing sector to relinquish their investments has stopped now. Current defaults are few and far between, with buyers understanding the medium- to long-term positive ramifications of property investments. Investors and homeowners having repayment-related issues also have the option to work out relaxed payment plans through developers or mortgage providers, thereby reducing default risk even further."
According to Kumar, in the early days of freehold property, the affordable real estate was bought mostly by investors who retained it for rental return or capital appreciation.
"Even though rents have corrected, first buyers of these projects enjoy a fair return on their investment. These products are always preferred by investors as well as end users and now that the market has been regulated, more end users will come forward to buy affordable housing projects," he said.
Kilzi said buyers of affordable units are the ones most affected by the economic crisis as they were the ones intending on staying long-term and relying on their monthly income to cover their mortgage.
Careful with agreements
Analysts said the current economic crisis has taught buyers to become more careful when it comes to reviewing their sales and purchase agreements.
"Compared to the earlier days of property sales, sales and purchase agreements have come a long way in terms of transparency. Reputed developers providing housing solutions within both the affordable and high-end sectors have placed a lot of emphasis on their sales and purchase agreement documentation policies, especially since the emergence of local authorities such as the Real Estate Regulatory Agency. There are further improvements that still need to be made in order to achieve the effectiveness and transparencies seen in the developed markets. That will happen as the market evolves and grows, and there are many instances of this taking place currently," said Gafur.
Kilzi added: "Most real estate developers have become aware of the market situation today and have learned that transparency is the best policy. With many having to agree to lower prices and give discounts and compensations to prevent people from defaulting, it is more apparent recently that transparency in communication as well as in purchase agreements has become a critical need."
"The most affordable areas in the emirate are Dubai Silicon Oasis, International City and Discovery Gardens, where prices have levelled off in the past three months," said Vineet Kumar, Head of Sales-Dubai, Asteco Property Management.
According to Gowealthy. com, apartments in affordable housing projects have recorded a marginal drop of about five to 10 per cent in the past quarter. In International City prices for a studio, one-bedroom and two-bedroom apartments were about Dh290,000, Dh475,000 and Dh578,000, respectively, during the first quarter of 2009. The current prices for these properties stand at Dh275,000, Dh450,000 and Dh550,000, respectively, reflecting a decline of roughly five per cent since the past quarter, said Parvees Gafur, Executive Vice-President for International Sales, Gowealthy.com.
Prices stabilising
Mohanad Alwadiya, Director, Harbor Real Estate, said prices in affordable housing are now stabilising but there is an increasing demand.
"In Motor City, the residential apartment prices were about Dh900 a square foot in the second quarter of 2008 and is now about Dh600 per square foot. In International City, the average price per square foot has dropped from Dh830 in the second quarter of 2008 to Dh600 in the second quarter of 2009. In Discovery Gardens prices were Dh1,050 per square foot in the second quarter of 2008 and are now about Dh650 per square foot," he added.
From a rental perspective, Rose-Marie Kilzi, Leasing and Resale Director at Great Properties, said Discovery Gardens, International City and Springs villas continue to offer the cheapest rental rates in Dubai.
"A one-bedroom apartment in Discovery Gardens is currently in the range of Dh55,000 to Dh65,000 per annum. For a two-bedroom villa, the Springs is the cheapest rental property going for Dh100,000 per annum upwards. The rents have stabilised over the past three months," she said.
According to realtors, mortgages are easier to find for affordable housing units with banks generally lending at around 75 to 80 per cent loan-to-value ratio (LTV).
Alwadiya said most banks are offering mortgages on finished properties or those that will be ready within the next 45 days. The LTV ratio is still hovering around 75 per cent on average at an interest rate ranging between nine to 11 per cent, he said.
"Some banks are even offering mortgages on some off-plan projects," he added.
Asteco said mortgage availability on finished properties hovered around 75 to 80 per cent of the assessed value of the property.
"Four banks are very actively providing mortgages including HSBC, Abu Dhabi Commercial Bank, Dubai Islamic Bank and RakBank," said Kumar.
No oversupply risk
Analysts said people with incomes starting from Dh20,000 per month upwards were able to buy affordable housing in Dubai. They all said there was no risk of affordable housing becoming oversupplied in the market due to demand not yet picking up very strongly and the fact that a number of properties are yet to come into the market.
Kumar said: "Affordable housing supply is limited. The market has more projects on going, which are mid-market to luxury. The only affordable projects built so far are International City and Discovery Gardens. What has happened with the correction is that a lot of the finished projects have now become affordable and end users are taking advantage of this correction."
Alwadiya said: "We are witnessing an earlier than expected recovery signs in the market today that will help enhance and boost the demand on property. Affordable projects will benefit first and most during the early recovery stages, which will ease the pressure on the supply of such projects."
Gafur believes supplies are not pouring into the market as expected or predicted earlier last year.
Also, considering existing units and their expected delivery dates, it is still not enough to meet the entire demand for affordable housing from both a sales and rental perspective.
"Current demand levels may seem a bit lean due to various factors such as summer holidays, price drop expectations etc. But the latent demand for affordable housing is still quite strong and it is just a matter of time and initiation of positive factors such as increased lending before the demand levels show a visible upward trend again," he added.
Demand picking up
According to agents, demand for affordable projects is picking up as buyers are continually seeking to take advantage of the low prices.
"Demand on affordable residential assets is exceeding demand on affordable offices. This is mainly driven by the fact that the number of ready affordable residential projects exceeds the number of ready affordable office projects today," said Alwadiya.
Kumar said the demand for affordable residential units was higher than affordable commercial properties in Dubai.
"Demand is for locations that are established in terms of infrastructure and buyers prefer to be closer to such areas. It is difficult to put a number but the market sentiment is high for affordable housing projects," he added.
Since affordable housing developments have so far been attracting bachelors/ single families, the developments are not fully equipped with community facilities and amenities, said Gafur.
"The developments are not fully geared to provide all the support elements such as groceries and other shops. Once these services are up and running fully, a wider and general audience will consider buying into these properties and drive demand levels much further."
No major defaults
Analysts said there were no defaults arising in the affordable housing sector.
Alwadiya said: "The rate of influx of population to the emirate still exceeds the rate of departures and if we examine the profiles of the inflowing and outflowing population, we will notice that most of the departures were from the blue collar population who were forced to leave because of the slowdown in the construction sector. On the other hand, the influx has been fuelled by white collar or investor population."
Gafur said: "We have not noticed major defaults on payments across the affordable housing sector mainly because the developers have started to adopt flexible payment schedules."
"The initial panic mode that did prompt a few from even the affordable housing sector to relinquish their investments has stopped now. Current defaults are few and far between, with buyers understanding the medium- to long-term positive ramifications of property investments. Investors and homeowners having repayment-related issues also have the option to work out relaxed payment plans through developers or mortgage providers, thereby reducing default risk even further."
According to Kumar, in the early days of freehold property, the affordable real estate was bought mostly by investors who retained it for rental return or capital appreciation.
"Even though rents have corrected, first buyers of these projects enjoy a fair return on their investment. These products are always preferred by investors as well as end users and now that the market has been regulated, more end users will come forward to buy affordable housing projects," he said.
Kilzi said buyers of affordable units are the ones most affected by the economic crisis as they were the ones intending on staying long-term and relying on their monthly income to cover their mortgage.
Careful with agreements
Analysts said the current economic crisis has taught buyers to become more careful when it comes to reviewing their sales and purchase agreements.
"Compared to the earlier days of property sales, sales and purchase agreements have come a long way in terms of transparency. Reputed developers providing housing solutions within both the affordable and high-end sectors have placed a lot of emphasis on their sales and purchase agreement documentation policies, especially since the emergence of local authorities such as the Real Estate Regulatory Agency. There are further improvements that still need to be made in order to achieve the effectiveness and transparencies seen in the developed markets. That will happen as the market evolves and grows, and there are many instances of this taking place currently," said Gafur.
Kilzi added: "Most real estate developers have become aware of the market situation today and have learned that transparency is the best policy. With many having to agree to lower prices and give discounts and compensations to prevent people from defaulting, it is more apparent recently that transparency in communication as well as in purchase agreements has become a critical need."
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