Revealed: UAE Property Market Data, October 2015

"Dubai's real estate sector does not have much to worry about", property website Bayut reveals

Investment in Dubai will grow soon, Bayut said.
Investment in Dubai will grow soon, Bayut said.

The real estate sectors of both Dubai and Abu Dhabi remained buoyant in October 2015 due to strength of their rental segments.

In its recent report, of which Construction Week has acquired a copy, property website Bayut said: "While stakeholders in Dubai have heaved a sigh of relief following negation by many seasoned players of the exaggerated number of units (25,000) expected to enter the market, Abu Dhabi saw rents rising further owing to yet-to-ease supply pressure.

"Property developers have been positive nonetheless, with most saying their product launches had been taken up by eager customers scanning the market for quality projects in abundance," Bayut continued in its report. 

Read on for insights on the performance of Dubai's and Abu Dhabi's property markets in October 2015. 

Next page: Affordability alters Dubai's dynamics

Dubai

While prices adjust to inflationary gains [made] in the past, there was no stopping the upward growth of Dubai’s rental segment in October.

This has primarily been a result of a rise in working population that is demanding rental units by the hundreds.

The rental rise has forced many a tenants to look for affordable options across the Emirate, helping increase demand for areas such International City, Discovery Gardens, and Bur Dubai.

The overall average rental yield of residential properties in Dubai in October remained at 5.5% of the property value.

Interestingly, that is still more than global real estate hotspots, like London, which rests on 4% yield.

The top five localities for renting properties in Dubai were Dubai Marina, Jumeirah Lakes Towers, Bur Dubai, Downtown Dubai, and Dubai Silicon Oasis.

Although Discovery Gardens and International City could not make it to the top five localities, they did register respective increases in search hits of 73% and 71% in October.

Next page: Attractive returns buoy Abu Dhabi 

Abu Dhabi

Abu Dhabi’s real estate market performed considerably well in October.

Offering some of the highest rental returns on investment in the region, the UAE capital is fast-becoming a point of interest for international investors.

Residents favoured localities like Khalifa City A and Mohammed bin Zayed City over localities like Al Khalidiyah and Saadiyat Island in October.

The top five localities for renting apartments in Abu Dhabi in October were Al Reem Island, Al Raha Beach, Khalifa City A, Al Reef, and Al Ghadeer. 

Al Reem Island and Al Raha Beach retained their first and second positions with respective search increases of 27.4% and 41.2% in October compared with September 2015.

Khalifa City A secured the third spot with a 37% increase in search hits. Al Reef and Al Ghadeer secured the fourth and fifth spot with 20.9% and 36% increase in popularity, respectively.

Next page: 

Bayut's take

Now that the exaggerated news of unit oversupply in Dubai’s market put to rest for good, developers are sure to get focussed on finishing off projects at hand.

Investors who watched the action from the sidelines for months will likely be encouraged to test the realty waters.

Dubai’s world-beating rental returns have been making headlines and drawing attention of big and small investors alike.

Yields as high as 7% in certain apartment categories coupled with a falling trend in prices make the potential deal too sweet to be true, and we think Dubai’s real estate sector does not have much to fret over, since investment will return soon.

Abu Dhabi on the other hand, is gaining strength by the day, albeit at the cost of becoming too expensive an investment and residential option for some owing to rising sale and rental values.

Though the upward trajectory of values is a boon for the emirate, a more regulated supply to offset the rising hosing demand and values would be more than welcome.

We believe the government has taken the right measures with plans to introduce a rental index and more scrutiny of the real estate market.

As a topsy-turvy year in UAE’s realty history approaches its end, we reckon the next will see a set of much more mature buyers drawn in by not only Abu Dhabi and Dubai, but also smaller emirates like Ras Al Khaimah and Sharjah that have stepped up efforts to attract foreign capital.

 

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