There is a surge in demand within well-developed villa communities.
The Q1, 2021 UAE Real Estate Report, published by property management experts Asteco, reported that villa market rental rates in Abu Dhabi and Dubai were strong, despite the ongoing economic challenges and COVID-19 concerns, driven by a surge in demand within well-developed villa communities — mature and emerging.
The Abu Dhabi residential market delivered approximately 1,700 apartments and 50 villas during the first quarter of 2021 with an increase in demand for villas, particularly within well-developed villa communities such as Yas Island, Al Raha Beach, Saadiyat Island as well as the Al Reef community. Although average villa rental rates remained more or less unchanged over Q1 2021, there was a significant increase in rents for West Yas, Golf Gardens and Saadiyat Beach Villas.
According to the report, demand for completed villas for sale remained high in Q1 2021, predominantly driven by the limited availability of quality properties offered at attractive prices. Affordable communities such as Al Reef also noted heightened interest and hence an average quarterly rise in sales prices of 7 per cent. Conversely, Apartment sales prices remained broadly unchanged over the last 3 months due to limited demand in this sector.
Although the average rental market for residential properties remained relatively stable in Q1 2021, with a large majority of tenants looking to upgrade or upsize due to increased affordability within the mid to high end sector and the continued incentives offered by landlords, the office sector remained one of the most challenged asset classes in the Emirate. Landlords also increasingly offered incentives related to payment and lease terms. Several Grade A and B office buildings experienced a rise in demand from Chinese and Israeli companies looking to establish a base in Abu Dhabi.
The report indicated that no large-scale villa developments were handed over during the first 3 months of 2021 in Dubai, while apartment supply stood at nearly 2,000 units with notable deliveries in emerging communities such as Dubai Hills Estate and Dubai Creek Harbour. Office completions were marginal at 70,000 Sq. Ft. of space.
The rental market in Dubai during the first quarter for apartments and villas increased, with average rental rates growing by 1 per cent and 4 per cecnt respectively. However, rates were still 10 per cent and 2 per cent less for apartments and villas when compared to the same period last year.
The surge in demand for villas can be attributed to changing working and living habits. Office rental rates continued their downward trajectory with quarterly and annual drops of -3 per cent and -18 per cent.
Similar to the rental market, the current situation has also affected sales prices to varying degrees with an average quarterly growth of 3% for apartments and 6 per cent for villas.
Although the impact on investment properties (educational, hospitality, and offices) has seen less activity, the villa segment witnessed a marked increase. For example, villa sales prices in Arabian Ranches, Meadows and Springs rose by 9 per cent on average over the quarter. Apartment sales also fared better with quarterly increases of 5 per cent in Jumeriah Village and Dubai Sports City.
In Al Ain, tenants taking advantage of lower rental rates saw the Real Estate market activity in Q1 2021 increase.
Apartment rental rates across the Northern Emirates remained more or less stable over Q1 2021 with marginal declines of -1 per cent for high end properties in Ras Al Khaimah (RAK) and Fujairah. Apartment sales prices in Sharjah also increased by 3 per cent over the last 3 months, whilst RAK recorded no change.
The report concluded that it is apparent that the unprecedented COVID-19 situation has affected various segments of the Real Estate sector differently, down to (sub) category/segment levels, with unclarity as to when conditions will normalise and how transactional volumes and values will be affected.
Asteco is a major regional and international award-winning full-service real estate services company that was formed in 1985 and has gained enormous respect for consistently delivering high quality, professional, value-added real estate services in a transparent manner. The company is also widely recognised for its involvement with many of the projects that have defined the landscape and physical infrastructure of the United Arab Emirates. The world-class company has a distinguished and important combination of local knowledge and international expertise and has been renowned for its application of the latest technological tools and innovations, its commitment to transparency, winning strategies and human expertise.
Undisputed Real Estate experts with a regional presence to serve its customers, Asteco proudly represents a significant number of the region’s top property Owners, Developers and Investors.
Asteco offers a wide range of services and solutions to its clients from Sales & Leasing, Property Consultancy & Management, Owners’ Association Consultancy & Management and Clubhouse & Lifestyle Management to Building Consultancy, Retail Management, Valuation and Advisory as well as Franchising services.