10/04/2009 11:38 PM
Dubai: Residential prices in the UAE have been more unpredictable this quarter than during the rest of the year.
Villas accounted for 60 per cent of all residential sales in Dubai in the third quarter, with prices increasing by eight per cent on average. Villa prices are likely to remain stable in the short term, according to a recent report by Landmark Advisory.
Apartment prices, in contrast, fell three per cent in quarter three. This may be compared to a 17 per cent fall in quarter two.
"Apartment inventories remain stable with the majority of sellers holding prices and because many distressed sales that were available over the past three to six months are no longer available," Jesse Downs, director of research and advisory at Landmark Advisory, said.
While the current supply and demand situation in Dubai is far from perfect, demand for apartments is primarily leaning towards more affordable units. Financing remains an issue with financed apartment sales declining to 14 per cent in quarter three.
In terms of leasing, villa rents in Dubai increased six per cent echoing the sales trends which Downs attributes to "considerable demand" stemming from relocation within the UAE.
Unlike the villa segment, Dubai apartment rents dropped 17 per cent during the third quarter.
In Abu Dhabi, listings were increasingly inconsistent with real market values. Average listed prices for apartments and villas increased eight per cent and 10 per cent respectively.
Asked rents in the capital appear stable while agreed rents continue to fall.
"Landlords are gradually adapting to Abu Dhabi's shifting rental market. For example, landlords actually used to prefer high vacancy rates over low rents but are now increasingly willing to negotiate discounts and multi-cheque agreements with prospective tenants," Downs said.
While this year's Cityscape event, which starts today, will not be showcasing the over-the-top projects we have become accustomed to the general consent among industry experts, investors and tenants is that the market is beginning to stabilise.
However, short term concerns remain including those about Nakheel's ability to pay its bond which matures in December.
A recent report by Merrill Lynch, said the UAE's GDP is expected to contract by -one per cent in 2009 with a small pick up of two per cent in 2010.