DUBAI: Prices of real estate properties across the United Arab Emirates (UAE) are falling due to oversupply, real estate companies said, in what appears to be an opportune time for overseas Filipino workers (OFWs) living with their families or friends to upgrade from partitioned accommodations to studio-types, even two- to three bedroom units.
Indeed, OFWs renting studio-type units got smiles on their faces renewing rent contracts, among them Joshua de Leon, who lives in Rigga, Deira and whose annual rent was reduced this year by Dh2,000 from Dh34,000 for a quarterly payment of Dh8,000.
At a monthly rate, this would be around Dh2,600, just a few hundred dirhams more than the going rates for partitioned accommodations in Rigga, which hover at Dh1,500 excluding utilities.
“The difference is not that much, considering you get to enjoy privacy,” de Leon said.
Mitch Lope, who lives with her family in Deira, also got a rate reduction for a three-bedroom unit they have been renting – from Dh140,000 two years ago to Dh110,000 this year.
Mazzy Calderon said she and her family plan to upgrade to a three-bedroom unit in Tecom, which has an annual rent of Dh85,000. The Calderons are currently staying in Satwa, a Filipino community enclave. “Mahal sa Satwa,” she said.
Forecast
Knight Frank, an independent real estate consultancy, had as early as last year predicted this trend saying in a report entitled, “UAE Market Review and Forecast 2019,” that residential prices and rents “were likely to continue to soften in 2019.”
“Mainstream residential prices in Dubai fell by 4.1% over the year to November 2018,” stated the report, citing the company’s Property Monitor Index. It added that prices for villas continue to fall at an even faster pace at 6.1%, compared to prices for apartments which fell by 4.8% over the same time period.
“In Dubai, while demand had eased in 2018, price falls are more due to the considerable level of supply which has been delivered in 2018 and that which is expected to be delivered in 2019,” the report, released in January this year, further stated.
“This increase in supply, in addition to the unabsorbed supply from previous years has led to the extended pressure on prices and rents which we are witnessing, this trend is expected to continue throughout 2019.”
Abu Dhabi
Meantime, Nationwide Middle East Properties (NMEP), an Abu Dhabi-based real estate agency, said rental rates “continue to fall” in the Capital City and “tenants are seeing this as an advantage to either look for bigger properties or try to negotiate their contract renewal with a lower amount.”
Demand for rented units has increased in the third quarter of the year – “the highest on record between 2015 and 2019,” said the NMEP report, entitled “Real Estate Market Trend Q3 2019.”
It noted that one-bedroom units are the common preference.
“With the continuous drop of prices, residents can now easily choose from a number of luxurious yet well-priced and affordable properties that are being added in the Abu Dhabi real estate market,” the report stated.
“Now that residents are opting to move to properties at a lower cost, this is giving them more opportunity to improve their quality of life, allowing them greater choice within their budget,” it added.
The report further stated that the “relative decrease in property prices – caused by the increasing number of available units on the market – allowed investors to acquire properties with relatively low prices.”
This is the perfect period to invest in real estate where the acquisition cost is relatively low against a good rental income for the existing projects, NMEP said, adding that the forecast is for property prices to increase again in the first half of next year.
‘Interest in established areas’
The Bayut report stated that Dubai property trends in the third quarter “indicate a perceivable interest in established areas by potential tenants.
“Neighborhoods like Dubai Marina, Bur Dubai and Deira take the lead for rental apartments in Dubai over the last quarter,” said the report.
Dubai Marina studios at Dh50,000/year
Plush Dubai Marina, a touristy place, is another of the sought-after areas in the Dubai real estate market, said the Bayut report.
One-bedroom flats in Dubai Marina average at Dh75,000 from last year’s Dh81,000; while studios are at Dh50,000 from last year’s Dh55,000; and two-bedroom units at Dh110,000, down by Dh10,000 from last year’s rates, still according to the Bayut report.
Other notable areas include Jumeirah Village Circle, which recorded the most significant decline in rentals for one-bedroom units, Bayut said, at 7.4% to Dh50,000 in the third quarter.
International City, Dubai Sports City, Dubai Silicon Oasis and JLT were also on the list.
Al Barsha 1
Al Barsha is in the top five places for people looking to rent, according to various property finder portals.
Studios start at average Dh36,000; one bedroom units are in the range of Dh44,000 and Dh50,000; and two bedrooms at Dh65,000.
Al Barsha is great for people working in the Dubai Media City/Tecom areas. It also has a city-life feel to it with cafes and restaurants as well as close proximity to the Mall of the Emirates. Knight Frank said rental rates across Dubai fell on average by 7.7% in the year to November 2018 with apartment rents falling by 8.4% and villa/townhouse rents by 8.3% over the same time period.
On the other hand, it said rental rates across Abu Dhabi fell on average by 8.7% in the year to November 2018 according to the Property Monitor Index. On average, apartment rents fell by 7.7% and Villa rents by 8.4% over the same time period.
