After a stable first quarter, quality residential developments in Dubai bounced back during Q2, with average rent increases of 6% for apartments and 9% for villas, Asteco’s H1 2012 report said. Sales prices recorded double-digit increases in three developments, with rises of 6-8% elsewhere.
“After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes,” said Elaine Jones, CEO at Asteco.
Rental rates for apartments were relatively stable through Q1 with minor declines in low quality/ poorly managed buildings in certain areas, the report noted. Towards the end of H1 2012 rates in established quality communities achieved average increases of 6%.
Apartments in Dubai Marina and Downtown Dubai were the most sought after, witnessing a 10% increase, with a two-bedroom apartment fetching between Dhs90,000 and Dhs120,000 per annum.
“Tenants are relocating in search of value-for-money, one- and two-bedroom apartments as well as three- and four-bedroom villas are the preferred unit types. In terms of rates, quality well managed developments, will continue to set the pace,” Jones said.
Leasing rates for villas followed a similar trend, stable throughout Q1 2012 with an average increase of 9% through the latter part of Q2 2012. Mirdiff showed the largest increase with rent for a three-bedroom house increasing to Dhs90,000 per annum, a 13% jump from Q1 2012.
Double-digit (11%) growth was also recorded in Arabian Ranches, with a three-bedroom villa now costing Dhs140,000 per annum, the report said.
Sale prices climb
On the sales front, prices for one-, two- and three-bedroom apartments in Downtown Dubai, Dubai Marina, and Palm Jumeirah retained their popularity and witnessed price increases of 9%, 8% and 8% respectively during H1 2012. Apartment prices elsewhere in Dubai remained relatively stable, with apartments in JBR seeing a 3% increase.
Sales price increases for villas were dominated by Arabian Ranchers (16% price increase), The Springs (14% price increase) and Jumeirah Islands (11% increase). For all other developments in the report, prices increased by 6% to 8% with the exception of Jumeirah Village where prices were stable.
Villas on the Palm Jumeirah are now the most expensive in Dubai at Dhs17,200 per square metre, followed by Jumeirah Islands and the Meadows priced at Dhs10,750 and Dhs10,250 respectively. The lowest prices can be found in Jumeirah Village at Dhs5,400 per square metre.
“Looking ahead to the 2012 year end, sales prices will continue to rise for quality developments, especially villas. The number of owner-occupiers rose steadily in line with improved financed options offered by banks, which we expect to continue. Further demand will also be evident from overseas buyers escaping economic woes in the Eurozone