Inayat-ur-Rahman, Business Editor

The UAE’s property market is on a solid growth trajectory and is marching ahead despite the global COVID-19 challenges. The resurgence of the UAE’s real estate market continued in Q2 2021, with some segments seeing double-digit growth in sales prices. The Q2 2021 UAE Real Estate Report by property management experts Asteco revealed that villa rental and sales rates in Abu Dhabi and Dubai continued to surge, with sales prices in certain segments expanding by almost a quarter in the period under review.

Apartment rental rates across the Northern Emirates softened marginally with average declines of 1% to 2% over Q1 2021 and 6% annually. Office rental rates in Sharjah remained unchanged over the second quarter of the year, with annual declines averaging 16%.

According to the Sharjah Real Estate Registration Directorate (SRERD), 40,364 transactions valued at Dhs 12.2 billion were recorded in H1 2021, a surge of over 40% compared to the same period last year. Most of those transactions occurred in the residential sector (49.6%), followed by commercial (37.1%), industrial (11.1%) and agricultural (2.2%).

In Sharjah’s master plan communities, apartment sales prices recorded a marginal increase of 2% on average, whilst the more mature GCC freehold areas showed signs of stabilising.

The report said that developers delivered approximately 2,070 apartments and villas in Q2 2021 in Abu Dhabi, particularly within Yas Island, and several buildings in Al Raha Beach.

The report notes that more than 9,350 residential units are set for handover before the end of the year; however, some projects are likely to experience delays and spill over into 2022.

Apartment rental rates in the capital softened marginally (by 1%) over Q1 2021. Annual declines, however, were more pronounced and averaged 8%. The report noted that mid and high-end properties were the most affected, with some units registering declines of between 10% and 15%.

The report indicated that villa rental rates recorded an average increase of 1% in Q2 2021, predominantly driven by the rise in interest for well-developed villa communities located on Yas Island, Saadiyat Island, and Al Raha Beach.

Tenant movement was dominated by residents looking to upgrade/upsize, with most shifting to villas and townhouses. The increased availability of units within the mid to high-end sector facilitated this move, the report said.

Rental rates for office space in the capital remained constant in Q2 2021 from the first quarter, with landlords offering incentives such as flexible rent period, service charges waiver and/or reduced fit-out cost. Rates for offices in the capital saw an annualised drop of 4%.

Demand for completed villas for sale continued to rise over the quarter, particularly within the upper-end segment, mirroring the rental market. Villa sales prices increased by 1% on average in Q2 2021, predominantly driven by Al Raha Gardens and Al Reef, which recorded 6% and 2% sales growth rates, respectively. The second quarter of 2021 saw approximately 6,650 apartments, 1,500 villas, and 750,000 sq. ft. of office space completed in Dubai, despite COVID-19 related restrictions.

Most Dubai communities recorded rental rate growth in Q2 2021, resulting in an average increase of 3% and 8% for apartments and villas, respectively. While average apartment rental rates remained in contraction at 3% compared with the same period last year, villa rental rates grew by a robust 10%.

Office rental rates continued their downward trajectory with quarterly and annual drops of 4% and 16%, in line with stunted employment/business growth. As a result, the report said, some landlords are looking at repurposing existing/upcoming office buildings.

Sales prices recorded a significant surge, particularly in the villa segment, with an average quarterly and annual increase of 16% and 23%. Apartment sales price growth was less pronounced, but still expanded at a robust 6% over Q2 2021 and YoY.

However, the growth momentum experienced in the first quarter of the year appears to be slowing as pent-up demand resulting from the COVID-19 lockdown/restrictions is absorbed. However, Expo 2020 and the continued successful rollout of the vaccines and pandemic containment measures by local and federal governments are expected to maintain the positive sentiment.

In Al Ain, apartment rental rates remained unchanged over Q2 2021 from the previous quarter, whilst annual drops were marginal at 3%. Villa rental rates softened by 1% over the last three months and 2% compared with the same period the year before.

While real estate market activity itself continued on a positive note due to active local tenant movement in search for value-for-money properties, elevated vacancy rates necessitated landlords to be flexible and offer discounts and incentives such as rent-free periods (up to 3 months) and flexible payment terms (up to 12 cheques), the report said.

There was limited or no change in the average office and retail rental rates in Al Ain, as incentives somewhat offset net effective rates.

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 recognized 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. The company applies innovative solutions and cutting-edge technology to add tangible value for its clients at every stage of the property lifecycle and to continuously elevate customer experience.