As we revealed in our exclusive report on the first quarter of the year, the start of 2017 was a period of equilibrium for the UAE’s real estate market. Both Dubai and Abu Dhabi experienced a small dip in one segment which offset a slight increase in another. An example of this being that by the end of Q1, apartment sales in Abu Dhabi were outperforming the rental market. Meanwhile, its glitzier sister emirate of Dubai saw average apartment prices drop by 4% which was balanced by an increase in the rentals side of the apartment market by 7-9%.
As we look towards the second half of 2017, we can now reveal how the month of May compared to the first quarter of the year and what this might mean for the real estate sector of Dubai and Abu Dhabi going forward.
We noted in our Q1 report that Dubai rents were rising across many areas and this upward trend has continued by an average of 0.1% from Q1 to May, particularly in apartment rent prices.
Renting in Dubai
In Q1, the average rent for a studio apartment in Dubai was AED 56,450 while in May, the average has risen to AED 57,940, an increase of 2.6% for this property type. Similarly, there has been a 0.7% increase in average rent price for one-bed apartments and four bedroom villa rental prices have been subject to a rise of 3.3%.
Renters in the emirate will be interested to know that average rental prices of 3-bed apartments in Dubai, when compared to the earlier months of the year, have dropped by a significant 3.8%. In fact, out of the 5 areas that Bayut.com had the most searches for this month, we saw an overall decrease in rent prices for three of them – 2.4% in Dubai Marina, 4.6% in Downtown Dubai and 15.6% in Dubai Silicon Oasis. The other two, Jumeirah Village Circle (JVC) and Mirdif, however, had rises of 9.8% and 3%, respectively.
Buying in Dubai
In the sales market, average property prices in Dubai have dropped by 0.7% this month but the average ROI has remained consistent at 4.8% across both Q1 and May.
Out of the top 5 most popular areas to buy in Dubai this month, three have had an upward price adjustment. In Dubai Marina, property prices have risen by 15.5% and there has been a 1% increase in property prices in Jumeirah Village Circle (JVC). May saw an upward trend in Dubai Silicon Oasis as well when compared to Q1.
Property prices in Dubai have been consistently falling for the last three years but what our May numbers show is that downward trend is beginning to stabilise. As a result of Dubai’s recovering economy and the creation of construction jobs for Expo 2020, it is predicted that there will be a rise in both house prices and rents over the coming years. Both property prices and rents are anticipated to start increasing in 2017 – which the rental market has demonstrated this month.
The market report for May in Abu Dhabi is less of a balancing act than that of Dubai as both rent and sale averages experienced a slight decrease. Our data for May looks to agree with market predictions across the real estate sector which anticipate a price fall in Abu Dhabi this year as the recent oil drop continues to affect the market.
Renting in Abu Dhabi
Compared to the first quarter of the year, average rent prices have decreased by 2.4% in Abu Dhabi – although a closer inspection of property types shows more variation within this downward trend.
Rent for studio apartments in Abu Dhabi actually experienced an average increase of 1.2% while prices for 2-bedroom apartments increased by a more significant 3%, from an average of AED 120,800 at the start of the year to AED 124,500 now. One-bedroom apartment prices fell by 1.5%.
And more specifically, average rent prices in one of the top 5 most searched for areas in the emirate this month see a 22% decrease in Al Muroor and a 9% decrease in Mohammed Bin Zayed City. Meanwhile, renters in Khalifa City A should note a 6% increase in rent prices in May compared to the year’s first three months.
Buying in Abu Dhabi
The market has also seen a slight drop in average sale prices. Average ROI has experienced a 0.1% increase this month, climbing from 4.9% to 5.0%. While Abu Dhabi’s market is adjusting to the drop in oil prices, it will continue to add new units and cultural attractions over the coming months. As we near the second half of 2017, their real estate market is becoming an increasingly lucrative sector for investors and renters alike.
If the trends we have observed in May extend into H2 of 2017, property prices may continue to fall in some of Dubai’s most popular areas, such as Downtown Dubai, despite predictions for an overall increase across the emirate. For renters, rent prices are very likely to continue to rise – although areas like Dubai Marina and Dubai Silicon Oasis may continue to enjoy the downward trend seen in May a little further into the year.