UAE real estate sees 'early signs of confidence' in Q2

PROPERTY PRICES: Dubai and Abu Dhabi are seeing early signs of renewed confidence in the second quarter of 2009, according to Landmark Advisory. (Getty Images)

A UAE real estate research company on Monday said it was seeing "early signs of renewed confidence" in the UAE property market.

“For both Abu Dhabi and Dubai, positive signs of early recovery are emerging. Property listings are drying up as owners increasingly prefer to hold their properties for the medium- to long-term, instead of discounting prices further just to attract immediate buyers," said Jesse Downs director of research and advisory services, Landmark Advisory.

"More owners are choosing to lease their properties as a cash-generating alternative to selling,” she said at the launch of the company's Dubai & Abu Dhabi Real Estate Report for the second quarter of this year.

According to Landmark Advisory, average prices in Dubai during the first quarter decreased 23 percent for apartments and 32 percent for villas, compared to the last quarter of 2008.

Average leasing rates for apartments decreased 4 percent in Q1, with one-bedroom apartments declining the most, at 11 percent.

Average villa rents declined by 17 percent, but the number of villa rentals increased by 26 percent.

“The leasing market in Dubai is still strong, showing continued interest from internal relocations and excess demand from Abu Dhabi," said Downs.

"The future of sale prices and transaction volumes will depend largely on the evolution of lending policies and demographic changes over the next four months. In terms of population, additional outflows are likely to coincide with the end of the school year,” she added.

In Abu Dhabi, sale price declines accelerated during the first quarter of 2009, after falling by 5-15 percent in at the end of last year.

Secondary market listing prices fell up to 20 percent for apartments and 25-30 percent for villas.

However, by the beginning of the second quarter, sale prices started to stabilise as sellers slowed the pace of price-cutting, according to the report.

The report shows that Abu Dhabi’s rental market has also stabilised. After sky-rocketing in 2008, some rents have begun to show signs of a marginal correction.

On average, rents for apartments remained stable during Q1, but villa rents, decreased 10-15 percent, with listed rents on four-bedroom units falling the most, at 20 percent.

Downs said: “Abu Dhabi’s sale prices are starting to stabilise, indicating improved market confidence. The buyer-profile is changing: end-users are replacing investors as the predominant owners of freehold property."

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