Compare real estate market of Dubai and Abu Dhabi
Real estate in Dubai
The economy of the United Arab Emirates continues its recovery, and now it concerns not only the capital of the UAE but also Dubai. According to experts, today rents and housing prices are rapidly increasing here, which were previously at a reduced level due to the worldwide epidemic of the coronavirus. Buy a property in Dubai, so that this asset will start to earn you income as soon as possible.
Property for sale in Dubai
Consulting company CBRE summed up the results of the first quarter, which made it possible to assess the situation in the real estate market in Dubai. Experts have calculated that over the past year, the cost of housing has increased by 1.5%. Moreover, this indicator is an average value and depends on the type of property.
- The cost of villas increased by 1.1% – now a square meter of such housing will cost buyers about AED 8,800.
- As for apartments, the increase in the average cost was 1.6%: it amounted to AED 10,900.
Along with the cost of housing, the average rent also began to grow. Over the year, it has grown by 0.6%. It is noteworthy that in the rental sector growth was observed only in apartments. Villa rentals, on the contrary, have become more affordable: their prices have fallen by 1.6%.
The experts who prepared the report also mention that the real estate market is experiencing a situation with a limited number of properties. During the first quarter, developers were able to sell only 200 new units of real estate. At the same time, during the whole year, according to the developers’ plans, a little more than 9,500 units will be commissioned.
Commercial property in Dubai
Today, Dubai is experiencing rapid growth in demand for commercial property, especially offices. This situation can be explained by the fact that most people return from remote work, switching to standard mode.
The data that was collected for statistics shows that the commercial real estate sector shows a higher level of attendance at work than it was before the coronavirus pandemic. On average, this figure increased by 25.3%.
In the report, the specialists also mention that the vast majority of real estate in the private sector is in enterprises that operate on a flexible schedule. Speaking about traditional office space, it is most often rented by companies or organizations associated with the government.
- On average, the rent for the past year decreased by 7.9% – this figure is typical for offices of the Prime class.
- Rent of Grade A-class office premises by 3.9%.
It is noteworthy that against the background of such a decrease, the cost of renting class B offices remained at the same level.
Dubai rent fall
If residents haven’t yet felt the change, experts say it’s because the pandemic’s full impact has only begun to sink.
After the passage of the pandemic, a certain market trend has emerged: housing rents in the UAE are falling. And real estate experts believe that this will continue until the end of the year and will last until 2023.
In Dubai, according to available data, the average apartment rent fell by about four percent compared to the previous quarter and more than 9% compared to the previous year in all districts.
- Motor City, Sports City, and Dubailand saw the sharpest quarterly declines in average rents. On the other hand, rentals of apartments in International City, Jumeirah Lake Towers, and DIFC remained stable during the second quarter in a row.
In the villa segment, rents declined more moderately at around 2.5% quarter-on-quarter and just over 7% year-on-year.
- Springs, Grasslands, and Arabian Ranches saw the sharpest drop in rental rates, while Jumeirah Islands, Palm Jumeirah, and Emirates Living Lakes saw the lowest annual declines.
Tenant movement
As the price drop became more visible, people began to move. Some are cutting spending and moving to cheaper areas, but some are moving to bigger homes.
Chirantan Joshi, CEO of Emovers, said: “We have seen movement in both directions. Some of them are downsizing, but some are moving to bigger houses because they are now more affordable. There are great rentals on the market and this has increased the overall traffic. The Dubai hills area is in high demand these days.”
Double-digit decline in Abu Dhabi
In Abu Dhabi, on average, the difference between rental rates in the first two quarters is 1-2%, but compared to the same period last year, it shows “astonishing” figures, experts say.
The second quarterly report from Asteco, a leading real estate provider, showed that rents of apartments in the city center — a popular destination for expatriates — fell 6% of low-end properties and 5% of high-end properties compared to the same quarter of 2019.
As for apartment prices in the relatively fashionable areas of Khalidiya, El Batin, and Corniche, their fall was from 3% to 6% of low-class properties and 4% to even 15% of high-class properties. Prices for three-bedroom apartments range from AED 65,000 to AED 95,000 of low-end properties and AED 115,000 to AED 170,000 of high-end properties.
According to Asteco, villa prices have risen by a maximum of 1-2% over the past six months, and by 6% compared to the second quarter of 2019.
The fall in prices will continue
Another expert said apartment rents are expected to fall further.
Elaine Jones, executive chairman of Asteco, said: “With a strong possibility of business cuts and potential job losses, there is a high risk that demand for property – rent, and sale – will weaken even further.
Ben Crompton, a managing partner at real estate agency Crompton Partners, also found that residents are moving from luxury apartments to villas, even in places where prices have remained the same.
“What we are seeing is a huge amount of interest in villas, but villa rentals have either remained stable or have increased over the past six months. More and more people are moving from luxury apartments where they don’t have a balcony, I guess to where they have a garden so the kids have somewhere to play,” he said.
Real estate agency in Dubai
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