By Staff writer
New Bayut report highlights noticeable slowdown in the rate of price drops, visible increase in average rents
Both Dubai and Abu Dhabi real estate markets appear to be "making strides towards recovery", heading into the final quarter of 2016, according to a new report.
Real estate website Bayut said there was a noticeable slowdown in the rate of price drops and a visible uptick in average rental values in both emirates following months of continued downward movement.
The average price for apartments in Dubai dropped by 1.2 percent in October compared to the year-earlier period, while the drop in Abu Dhabi was also significantly smaller at 0.7 percent, the report said.
Similarly, the average apartment rent in Dubai dropped by 1 percent in October compared to the Q3 value, and posted a 1 percent increase compared with the average rent in September.
The average apartment rent in Abu Dhabi held its ground against the Q3 number, while some individual bed categories posted healthy surges in rates, Bayut said, adding that it believes that changes in both the rental and sale markets will have a "positive bearing on the real estate market that is constantly fine-tuning its way towards maturity".
Bayut said apartment rents across all bed categories averaged AED124,000 in October 2016, while average yield for apartments in Dubai also improved by 1 percent point to climb to 5.6 percent.
Bayut said studio rents performed best with average values in Dubai climbing to AED56,000, an 8 percent gain compared to the September average and a 2 percent increase over the average rent recorded over the course of Q3.
At AED92,000 per annum, the average rent for 1-bedroom apartments showed a 1 percent improvement over the Q3 average, while the rental rate of the 2-bedroom category dropped 1 percent to AED143,000, as did the AED199,000 rental average for 3-bedroom units.
Bayut added that the rental average for 4+ bed units was AED295,000, up 1 percent compared to the average rent in September.
Bayut's report said in Abu Dhabi the first three quarters of 2016 saw rents undergoing downward adjustments, making accommodations more affordable for tenants.
However, the downward spiral appears to be nearing its end as the average apartment rent in Abu Dhabi rose by 1 percent to AED130,000 in October compared to the previous month.
Studio apartments in Abu Dhabi led the upward charge with a 9 percent increase in average rent when compared to September average while 1-bed and 2-bed apartments saw increases of 2 percent and 1 percent respectively, with rents averaging AED92,000 and AED130,000.
The 3-bed category posted a 2 percent increase in average rent, taking the average value to AED174,000 while the 4+ bed category posted an increase of 3 percent month-on-month.
Bayut said: "Considering the recent project launches, the inclination of developers to market more and more projects to first-time home buyers and genuine end users, and the robustness of UAE’s various economic sectors, it is safe to say that the real estate market is heading towards maturity, one where genuine demand from stakeholders regulates supply.
"The upsurge in rental values and slowing down of price drops hints at the market edging towards stability following months of speculation over global issues such as Brexit and a liquidity crunch owing to low oil prices."
The report added: "With the UAE economy having ably negotiated the oil price crunch on the back of its diversity, both Dubai and Abu Dhabi will continue to be regional real estate hubs and offer lucrative returns to anyone willing to have faith in their potential."