Dubai realty in revival mode as buyers stage a comeback

Signaling a return of positive sentiments in Dubai’s property market in the current quarter, leading brokers Chestertons’ has said that price dropping was slowing down as investors and end users were making a gradual return to buying realty.

Stating that this was an encouraging change, Chestertons further affirmed that prudent buyers were aware that was the right time to step into the realty market which was showing signs of revival after stabilizing earlier this year.

Elaborating on the market scenario, the company revealed that areas that clocked the highest transactions in value terms during the first quarter of 2016 were Palm Jumeirah, Dubai Marina and Emirates Living.

In terms of the highest number of units sold, International City, Discovery Gardens and Dubai Silicon Oasis continued to attract more buyers, courtesy the higher yields on offer. However there is a chance of more locations from Dubai South and Dubailand making it to this select list going forward.

Sharing its market outlook for the remainder of this year, Chestertons said that while prices remained stable, rents were becoming to bottom out. Given the change in the attitude of investors and owner-occupiers, tenants were clearly mulling over the benefits of owning realty as opposed to renting, with banks also showing an eagerness to lend.

In stark contrast however, the Abu Dhabi realty market was in the throes of an upheaval in the leasing market. A trend triggered by scores of expats deciding to return home with the end of the school year to save on high living costs.

According to Chestertons head for Abu Dhabi, the market was going through a bit of a reshuffle with sales and rental values on the decline, making it a buyers’ market. With capital values heading south largely due to economic uncertainty and a tough job market, areas like Reem Island were facing an oversupply of units in search of long leases.

This in turn has resulted in many landlords in Abu Dhabi showing a willingness to offer shorter lease periods in addition to annual rent payments via multiple post-dated cheques. The market here is expected to remain flat for the rest of the year, with sale prices for luxury units likely to decline further.

The rental scenario is not expected to fare much better with demand driven by high-end expats likely to be much weaker this year with companies effecting cutbacks on many generous allowances of the past.

For potential tenants, this scenario offers a welcome change from November 2013 period when they had to endure rent hikes of upto 15% following the removal of the rental cap structure.

The market for new projects is also likely to remain subdued given the lack of liquidity and developers opting for a wait-and-watch approach by scaling back new launches in keeping with the slowing demand.