Dubai to see 12,000 new homes come up by first half

Asteco says emirate will see 10,700 new apartments and 1,300 new villas in next six months

Dubai will witness release of only 10,700 apartments and 1,300 villas during the first half of 2012, taking the total supply to 408,500 apartments and 59,000 villas, respectively, according to Asteco Property Management.

The Dubai-based real estate consultancy, in a report released on Sunday, said it expects over 5,000 units to be released in developments such as Mirdiff, International City and Dubai Silicon Oasis in the next six months. The release, however, depends on construction schedules being adhered to.

Majority of the villas, nearly 800 units, will be delivered in Dubai Green Community and Dubai Investment Park.

In September, Jones Lang LaSalle said approximately 5,000 additional residential units were expected to be completed by the year-end, followed by around 27,000 new units to be delivered in 2012. This will take the total residential stock to around 358,000 units. Majority of the new supply over this period will be in Dubailand, Dubai Marina and Dubai Sports City.

Rents stabilise

According to Asteco, apartment rents have stabilised with only International City, registering a two per cent decline in the fourth quarter compared to the third quarter. Studio and one-bedroom apartments were currently available for Dh16,000 and Dh23,000 per annum, respectively.

As for Dubai Marina, average yearly rent for a one-bedroom apartment was Dh62,500 while a two-bedroom apartment was going for Dh80,000. Rents for one bedroom and two bedroom apartments on Palm Jumeirah were Dh90,000 and Dh120,000 pa, respectively.

‘Emirates24|7’ reported earlier this month, quoting Reidin.com, that Dubai Marina was top performing area among the freehold developments, registering 800 transactions valued at Dh903 million in the first nine months of 2011.

Villa rentals too remained relatively stable. Average rents for a two- and three-bedroom Springs villa was Dh80,000 and Dh105,000 pa, respectively. Two- and three-bedroom villas in Arabian Ranches were offered for lease for Dh100,000 and Dh125,000 pa, respectively, while a two- and three-bedroom villa in Jumeirah were available for Dh105,000 and 140,000 pa, respectively.

Transactions for both categories (apartment and villa) picked up as tenants took advantage of lower rates to move to better quality accommodation, Asteco said, adding that people continued to relocate to Dubai from other emirates.

“We also witnessed an increased number of new people relocating to the emirate as a result of the general lift in business performance,” said Elaine Jones, Chief Executive Officer, Asteco.

Demand continued for locations such as Discovery Gardens, Jumeirah Lake Towers, Dubai Marina, Sheikh Zayed Road, Palm Jumeirah, Downtown Dubai, Emirates Living and Arabian Ranches, the report pointed out.

“Transaction levels are rising as job security and increased market confidence result in people seeking tenancy upgrades and home ownership,” Jones added.

Prices steady

Apartment sales prices remained steady in the fourth quarter after slight declines in the first nine months of the year. However, new areas or unfinished developments will continue to see declines.

Prices in Discovery Gardens, which saw a 10 per cent drop in the third quarter, remained unchanged — a sign that market conditions are improving, Asteco said.

Villa prices remained unchanged in the second half. Another important trend noticed by Asteco was an increase in number of end-users buying both villas and townhouses as more families and professionals were able to switch from renting to owning.

Average sales price for a villa in Arabian Ranches was Dh8,000 per square metre and Dh7,000 per square metre in the Springs, the report said.

Office market suffers

Office space supply will jump by 773,000 square metres to 9.27 million square metres by first half of 2012. The bulk of supply, almost 320,000 square metres, will be released in Business Bay, Dubai International Financial Centre and Sheikh Zayed Road.

Although sales and leasing prices were unchanged in the fourth quarter, activity remained low for sales as companies opted to lease rather than buy.

“Demand for office space is unlikely to improve for sales unless Dubai’s government offers more incentives,” the report said.