Jul 04 2012
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New property supply triggers tenants’ move to high end units
Wednesday, Jul 04, 2012
Abu Dhabi: Residential rates in Dubai continued to fluctuate between 2 and 3 per cent in the second quarter, 2012 while they were under control in the major market of Abu Dhabi as new supplies are to trickle in, a report by Asteco and Tasweek, leading property management and advisors showed.
Both reports considered the primary markets of Abu Dhabi and Dubai as tentative over the first quarter of 2012.
“A total of 7,400 apartments and 1,675 villas were added to the city’s rapidly expanding real estate sector in the first half of the year, triggering a wave of internal movement as existing residents sought to upgrade to better quality and value for money accommodation,” said Elaine Jones, CEO, Asteco Property Management .
Asteco report showed that tenants who are residing in Abu Dhabi benefitted from the supply increase of properties through maximisation of their housing allowances and upgrading current accommodations.
The prices of quality units in areas such as Emirates Living increased due to higher demand resulting from improved tenancy rates, rents and sales, according to Asteco report.
Dubai Marina and Tecom have been stable since the last quarter, however. locations such as Discovery Gardens and Silicon Oasis are still slumping due to the large supply of units and improvements on the living conditions of higher-quality areas.
On the other hand, Tasweek said that Abu Dhabi has been witnessing a steady influx of residential housing.
“Rental prices are on the downslide, particularly in the Mohammad Bin Zayed City as residential rates fell by more than 5 per cent. Demand for premium quality developments with mixed-use facilities also grew substantially with a high level of leasing activity for top tier products,” Tasweek said.
It added: “Supply will continue to grow in the next few months with the completion of developments such as the rest of the Reem Island towers, the Corniche Road towers, mega-projects in the port area, and projects in the Abu Dhabi International Exhibition Center, among others.”
Tasweek justified why some developers resort to promotional offers with more building rental schemes, which are directed towards tenants anticipating the foreseen sustained slide in sales and rentals.”
Masoud Al Awar, CEO of Tasweek, said: “The market is bound to post slight improvements and be more stable through the end of 2012.”
Al Awar expected that more stable growth as market maturity sets in after a four-year slow down, amidst expectations of returns and profits to become more realistic
The two reports attributed the increased residential sales transactions in H1 of 2012 to the completion of designated investment area projects and the availability of competitive mortgage interest rates and attractive selling prices.
Meanwhile, Asteco expects the leasing market to be active in the coming few months as an additional 7,000 new apartments and 4,560 villas will be ready for release in the next six months.
By Shehab Al Makahleh Staff Reporter
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