UAE Market Report November 2016

The real estate markets of the two main emirates of the UAE exhibited differing trends over the course of November 2016. While the pleasant weather and cool breeze apparently had a galvanizing effect on the Dubai realty market, things seemed to be cooling down in neighbouring Abu Dhabi.

Bayut.com noticed an upward movement of both rents and prices of apartments in Dubai, but apartments in Abu Dhabi underwent minor drops in both categories. The real estate market in Dubai has been buoyed by a spate of recent project launches by noted names in the industry, a development that has stirred up interest in the market once again. Abu Dhabi, on the other hand, has not seen similar activity, resulting in a more stable market.

Dubai

While the beautiful weather was the obvious talk of the town throughout November, improvements in rentals and prices of apartments doubled the glee for landlords.

Collectively, average apartment rent climbed to AED 127,000 in November, exhibiting a 2% increase over the average rental value in both October and Q3 2016. Average apartment prices increased by 1% compared to October 2016, and by 0.3% against the Q3 value, having a slight effect on the average yield, which was recorded at 5.7%.

The average studio unit rent dropped 2% to AED 55,000 in November compared with the previous month’s AED 56,000, but there was no change in the value when compared with the Q3 average. Average rental yield for the category was the best as always, at close to 8%.

The average rent for both 1-bedroom and 2-bedroom apartments registered a 1% increase in value, arriving at the AED 93,000 and AED 145,000 marks, respectively. The averages for both categories were also 1% better than the average rental values in Q3. The average rental yield for 1-bedroom apartments remained 6.8%, while that for 2-bedroom units was recorded at 6.1%.

The average rent for 3-bedroom units improved 2% compared to the October value to climb to AED 203,000. This average rental also exhibited a 1% increase compared to the Q3 value, landing at a decent 5.6% per annum. Bigger units, the 4+ bedroom category, experienced the biggest change in average rent, improving by 6% compared to October 2016. The average rent of AED 313,000 was also 4% higher than the average rental value of 4+ bedroom units in Q3 2016, but the yield for the category was low at 3.4%.

Popular apartment renting localities

1. Dubai Marina
2. Bur Dubai
3. Jumeirah Lakes Towers (JLT)
4. Downtown Dubai
5. Dubai Silicon Oasis

Popular apartment buying localities

1. Dubai Marina
2. Downtown Dubai
3. Jumeirah Lakes Towers (JLT)
4. Business Bay
5. Dubai Silicon Oasis

Abu Dhabi

The real estate market in the UAE capital had a stable month in November 2016 owing to a limited supply pipeline. At AED 129,000, there was a small month-on-month drop of 1% in average apartment rents in November, and a similarly negligible drop when considered against the average apartment rent in Q3. Overall, the average yield stayed stable at 6.75%.

Rent for studio units in the emirate took a hit, dropping to an average of AED 54,000 from October’s AED 58,000. Average rental yield for the category also dropped to 7.4% from the previous month’s 8%.

At AED 90,000, the average rent for 1-bedroom apartments was down a small 2% from the October average, but the value was the same as the Q3 average. The average rental yield remained close to 7%.

Average rents for both 2-bedroom and 3-bedroom apartments were down 3% in November, falling to AED 126,000 and AED 168,000, respectively. However, the rental yields for both categories remained attractive at 6.8% and 6.4%, in that order.

The average rent for the 4+ bedroom category dropped 7% compared to the October value and 2% compared to the Q3 average, landing on AED 236,000 in November. However, the category still offered a lucrative yield of 5.4%.

Popular apartment renting localities

1. Al Reem Island
2. Khalifa City A
3. Corniche Area
4. Al Raha Beach
5. Al Khalidiyah

Popular apartment buying localities

1. Al Reem Island
2. Al Raha Beach
3. Al Reef
4. Saadiyat Island
5. Al Ghadeer

Our Take

With the prices and rental values in Dubai’s real estate market making a marginal but steady recovery, the odds seem to be in the emirate’s favour. Riding high on its diverse economic portfolio, enviable lifestyle, its position as the regional business hub and its continuous utilisation of technology for socio-economic improvements, Dubai remains an international powerhouse sitting high on the global business and expat communities’ priority lists.

And despite a relatively stable month, Abu Dhabi continues to offer fierce competition to its neighbour on all economic fronts, including the real estate industry. Having ably coursed its way through the oil price and liquidity crunch, the UAE real estate market is much more prepared to negotiate crises small and large, and heading towards a level of maturity that invites long-term investor indulgence.