The first quarter of 2018 was bleak for residential property owners across the UAE as new supply, a lack of demand and other factors impacted the market, according to a report by consultancy Asteco.
The firm said apartment and villa sale and rental rates fell across Abu Dhabi, Al Ain, Dubai and the Northern Emirates, making for a tenants’ market.
In Abu Dhabi, apartment and villa rental rates were down 3 per cent and 2 per cent on the fourth quarter of 2017 and 11 and 9 per cent year-on-year. Sales prices were broadly unchanged quarter-to-quarter, Asteco said.
Nearby Al Ain saw apartment rents remain stable quarter-on-quarter but fall 7 per cent annually in mature buildings and 3 per cent in new buildings, while villa rents were down 2 per cent compared to Q4 and 5 per cent year-on-year.
Dubai rents were also down 1 per cent quarter-on-quarter and around 10 per cent year-on-year. Sales prices were similarly down 1 per cent quarterly but 6 and 9 per cent annually for villas and apartments.
Finally, in the Northern Emirates, apartment rents were down 1 per cent quarter-on-quarter and 11 per cent on the same period last year, according to the report.
Owners experienced continued on rents and prices from new supply entering the market, a lack of demand and attractive off-plan payment plans offered by developers, Asteco said.
“Tenants are increasingly taking advantage of the declining rents across the board, and choose to upgrade from apartments to villas or to better-quality and larger units,” said Asteco managing director John Stevens.
“However, many remain cautious due to economic uncertainties or are waiting for further reductions. People are also moving from older to newer buildings, as these often include parking and other facilities that are non-existent or come at an extra charge in mature buildings.”
There were 1,600 units handed over in Abu Dhabi and 3,650 in Dubai in the first three months of the year with 7,300 and 30,000 respectively scheduled for completion by year-end. As in previous years, Asteco said many of these units would be delayed.
Developers and investors are hoping a new 10-year visa policy announced this week can provide a welcome boost to the market after a slump that has lasted two years in some locations.
The new visa would allow investors, innovators and talented specialists in the medical, scientific, research and technical fields to stay in the country for up to 10 years.
A separate student visa will allow those studying in the country to stay for five years or 10 years in exceptional cases. In addition, the government will review the current residency system to extend the visa period for dependent students after completing their university studies.
S&P indicated in a February report that Dubai property prices and rents were likely to continue their downward shift for the foreseeable future.
“We believe this correction will continue at least for this year and next, before prices stabilise in 2020 at the earliest,” the firm indicated.