TASWEEK Real Estate Development and Marketing’s final market intelligence report for 2014 shows that residential activity continues to lead Abu Dhabi’s property market while business in Dubai is enjoying higher consumer confidence. Overall, the sector sustained the growth momentum of the past three quarters and moved towards a strong finish for the year.
Positive microeconomic, regulatory and population factors continue to drive real estate growth across the UAE, according to TASWEEK’s Q4 market findings. The country’s banks remain generally sound and profitable, although TASWEEK cautions that the gross loans/deposit ratio is nearing 100 per cent, thus indicating more limited room for growth. The domestic population also remains on track in which it reached around 9.9 million by the end of 2014 and expected to hit 18.83 million in 2023 to further stretch market demand. TASWEEK affirms a positive correlation between this growth rate and the increase in new UAE real estate projects. Moreover, government measures to dampen speculative activities in real estate and better control credit growth have further streamlined industry.
“There are many factors pointing to the continued growth of real estate in the UAE in 2015 and beyond, including a surging population, a resilient economy with an overall inflation rate of less than 2 per cent, resurgent market confidence, and stricter regulatory controls on the sector. These were correctly predicted by TASWEEK at the start of 2014 as the core drivers of the industry’s resurgence, said Masood Al Awar, CEO, TASWEEK Real Estate Development and Marketing.
Abu Dhabi’s residential segment led the local market upsurge, supported by the reduction of supply as a measure for landlords to protect rent levels, the removal of the rental cap, and the return of government employees residing in other parts of the country to the emirate in compliance with new housing policies. Overall, rent prices rose 5 per cent in the mainland and 3 per cent in freehold areas located at the outskirts of Abu Dhabi.
For Q4, the best studio deals were found in the Muroor Road and Al Markaziyah areas at an average annual rate of AED 57,750. Muroor Road offered the best 1-, 2-, 3- and 4-bedroom rates at AED 68,250, AED 84,000, AED 126,000 and AED 168,000, respectively. As for villa rentals, the Al Reef gated community had the best buys for 3-, 4-, and 5-bedroom units at corresponding prices of AED 130,000, AED 160,000, and AED 180,000. Al Reef also bested other areas in apartment and villa buy-side deals, posting an average price of AED 1,000 per square foot for apartments and rates of AED 1.5 million, AED 2.1 million, AED 2.5 million and AED 3 million for 2-, 3-, 4-, and 5-bedroom villas, respectively.
The sales market continued to stabilize in Dubai for Q4 2014. The observed slowdown in transactions is indicative of a growing market patience and confidence in the future. On average, sales prices decreased a little bit by 3 per cent compared to Q3. The hotel sector which has been underperforming over the second and the third quarters was expected to rebound during the peak Q4 of year 2014. As for retail, the segment maintained its solid growth even as office transactions remained inconsistent due to high levels of supply. Given how government data shows an average of 100 new commercial licenses issued daily, TASWEEK expects new demand to absorb existing and future supply. Prices will thus remain at the same level for the meantime.
Overall, the Dubai market has leveled off since Q3 2014, with the ongoing announcement of new projects not expected to have an immediate impact on supply given the longer-phased nature of the developments. TASWEEK notes that government measures to better regulate mortgage financing and double RERA transfer fees helped cool down the market in the last quarter. The company adds that more buyers are expressing interest in Dubai’s off-plan property options.
As predicted by TASWEEK at the start of the 2014, the UAE’s real estate market ended strong thanks to a vibrant economy, a surging population, strategic sector-related government measures, and renewed global confidence in the country’s property offerings. Abu Dhabi’s residential segment stood out in Q4 2014 and is expected to lead the local market in 2015. Dubai, on the other hand, is enjoying market stability characterized by a more patient and confident consumer base. Positive Q4 2014 trends in the UAE’s two main property markets bode well for another solid year of real estate business in 2015.
“With preparations for Dubai World Expo 2020 starting to gain steam, we can expect 2015 to be another stellar year for real estate in the UAE despite a number of global challenges. Industry players can refer to TASWEEK’s quarterly analyses to gear up for another period of consolidation and planning for future growth. The world is watching the UAE’s next moves as an invigorated property hub; we are confident that UAE will deliver above and beyond expectations given the market developments of 2014,” concluded Al Awar.