UAE MARKET REPORT JAN 2017

With a rather topsy-turvy 2016 behind it, the real estate market in the UAE is expected to take positive strides in 2017. Given the uncertainty prevalent in the global market, many realty investors are heading to markets that offer stability of rental returns as well as room for capital value growth. Dubai and Abu Dhabi rank prominently among such markets, and their unique position on the map and importance as the gateway to the MENA region make their pull even stronger.

Dubai began the year on a high note, as its real estate sector witnessed transactions worth AED 12 billion in the first 15 days of January. The emirate’s rental apartment segment saw a marginal decline of 3% in average rent compared to the mean value in December 2016, however, individual categories posted healthier numbers. On the other hand, the average apartment rent in Abu Dhabi grew 3% overall, climbing to AED 120,000 against the December 2016 value of AED 117,000.

DUBAI

During January 2017, Bayut noticed that the rental apartment market saw growth in individual categories, however, the overall average rent dropped 3% to AED 114,000 from the December average of AED 117,000. Average rental yield for all apartment types topped out at 5.72%, but yields in individual bed categories and areas went as high up as 8% and 10% respectively.

In the studio apartment category, average rent was recorded at AED 51,000 per annum, down 4% from the December mean of AED 53,000. The units returned owners an average rental yield of close to 8%. Rent for 1-bed units surged during the month, going up 5% to AED 90,000 from the previous mark of AED 86,000. Rental returns maxed out at 7.1% for these apartments.

There was a 2% improvement in average rent for 2-bed units. With rental yield at 6.2% on average, unit owners earned an average of AED 137,000 during the year. Three-bed unit rents also increased 2% to land at the AED 191,000 mark on average, while the yield was recorded at 5.34%.

Larger units in the 4+ bed category commanded an average rent of AED 344,000 and returned a rental yield of 4.25%. The average rent for the unit type was 10% more than the December 2016 value.

Top Apartment Renting Localities – January 2017

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

Top Apartment Buying Localities – January 2017

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

ABU DHABI

The apartment rental market took an upward turn with the start of the New Year, as overall average rent increased by 3% to land at the AED 120,000 mark, while average rental yield was recorded at 6.4%.

The average studio unit rent held its ground at AED 48,000 when compared with the mean value in December 2016. But a 4% increase in the average price of studio units meant the rental yield dropped to 6.4% on average.

The average rent for 1-bed units in Abu Dhabi moved up 1% from the December mean, arriving at the AED 85,000 mark in January. The rental yield for the category remained attractive at close to 7%. However, 2-bed units saw average rent falling by 2% to AED 122,000, while the rental yield for the category was recorded at 6.6%.

Three-bed apartments’ average rent also came down by 1% to AED 164,000, but rental yield remained lucrative at 6.3%. Larger apartments falling in the 4+ bed category commanded an average rent of AED 217,000 in January 2017, earning unit owners an average rental return of 5.3%.

Top Apartment Renting Localities – January 2017

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

Top Apartment Buying Localities – January 2017

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

OUR TAKE

Given the strength of its diverse economy and the ability of the country’s various public and private economic segments to continue churning out work opportunities, we believe the UAE’s allure to the global expatriate community will only grow stronger in the years to come.

The unique edge the country has in the shape of Expo 2020 will always come into play, but the UAE’s economy has generally exhibited resilience in the face of international turmoil over the past months, and that is what inspires investor confidence.

As both Dubai and Abu Dhabi remain regional powerhouses for leisure, trade, manufacturing and business services, the influx of global talent will continue to have a positive bearing on the real estate sectors in the two main emirates, helping them stay well clear of troubled waters.