Abu Dhabi rents spike, Dubai rents drop
Abu Dhabi rents spike, Dubai rents drop
Man behind the Burj Khalifa: ‘you don’t know the future’
As the weakening crude oil market continues to wreak havoc on the UAE economy, rental values in its two largest emirates are veering in different directions.
Average rental prices across Dubai fell 5 percent to AED54,000 (USD14,700) between July and August, while those in Abu Dhabi hopped 3 percent to AED 130,000 (USD35,400), data from property portal Bayut.com’s latest market report showed.
“Abu Dhabi is warming up for a development spree in the coming years that is set to boost its status as a key regional and international realty hub further,” the report stated.
Such findings square with Phidar Advisory’s latest data on rental values in the UAE. Apartment rents this year have plummeted 7.6 percent and 9 percent for apartments and houses, respectively, according to the real estate consultant. The emirates also registered an average decline of 7.5 percent and 6.7 percent in prices of apartments and single-family home.
Home values may plunge even further next year by as much as 10 percent due to slumping crude oil prices and the attendant slowdown in employment growth, Jesse Downs, managing director at real estate consultant Phidar Advisory, told Bloomberg. “As job growth remains slow, it’s unlikely demand will recover significantly for most of the properties being built which cater to mid-high and high-end buyers.’’
More: Dubai: 4 things we know so far about its slumping market
Developers are recognising that the Dubai market is well supplied for the next few years and “can’t absorb anything sooner,’’ Craig Plumb, head of Middle East research at Jones Lang LaSalle, told Bloomberg. “I think we’ve reached the bottom, but I’m not expecting a rapid increase within the next six months.’’
Investors may yet find bright spots around the emirates’ property market, however. According to Bayut.com, rental yields for studio apartments hover at 7.6 percent in Dubai and 7.9 percent in Abu Dhabi. Average rental yields in Abu Dhabi stands at 6.6 percent across all apartment catehories, compared with 5.6 percent for Dubai.
But even Mohamed Alabbar, chairman of Emaar Properties, the company behind the Burj Khalifa, is taking a cautious stance. “You really don’t know the future anymore,” he told Bloomberg. “You have to do business on your toes and be cautious because the environment is changing all the time.’’
Read next: Dubai real estate market bottoms out
Source: Property Report