Asteco says surprised by growing number of new residential launches in Q1 amid oversupply concerns
New real estate project launches have picked up again in 2019 despite concerns about oversupply in the UAE, according to new research.
Asteco's Q1 2019 - UAE Real Estate Report said that despite prevailing soft market conditions, new project launches, particularly from top-tier developers, have picked up again, after slowing towards the end of 2018.
“This trend is somewhat suprising given prevailing oversupply concerns,” said John Stevens, managing director of Asteco.
New supply also increased with the delivery of approximately 6,700 residential units in Dubai - 5,800 apartments and 900 villas - and 3,600 properties in Abu Dhabi - 2,800 apartments & 800 villas.
These figures have nearly doubled compared to last quarter, which is due to previously delayed projects handing over but can also be attributed to the increased delivery of properties with extensive post-completion payment plans, he added.
Asteco said commercial handovers were limited in Dubai but are expected to pick up with the imminent release of more than 750,000 sq ft of office space in Silicon Park. Office completions in Abu Dhabi included Al Jewn Tower in Danet Abu Dhabi.
As a result of this new inventory, and in line with continuous economic uncertainties, rental rates and sales prices recorded further declines across all emirates, Asteco noted.
It said Dubai rental rates contracted by 3 percent for apartments, 3 percent for villas and 2 percent for offices over the last quarter, and by 11 percent, 9 percent and 15 percent respectively since Q1 2018.
Sales prices declined by 2-4 percent during Q1 and 14-15 percent annually.
"It is important to note that “interest in off-plan projects as well as secondary properties was somewhat buoyant, aided by competitive, more affordable pricing and attractive payment plans," the Asteco report added.
Apartment and villa rents in Abu Dhabi decreased by 2 percent and 1 percent on average in Q1 and 9 percent and 5 percent over the year.
Overall, apartment rental rates in the Northern Emirates contracted by 3 percent in the first quarter and 11 percent year-on-year, with high-end properties in Sharjah and Ajman proving to be the most resilient with marginal quarterly decreases of 1 percent and 2 percent.
Annually, Al Ain apartment and villa rental rates decreased by 2 percent and 8 percent, while retail rents dropped 5 percent. Office rates remained unchanged mainly due to the lack of activity in the market, the report said.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.