UAE Market Report August 2016
Affordability remained the centre of discussions at the recently concluded Cityscape Global real estate exhibition in Dubai and the city's rental market reflected just that in August 2016. To the delight of renters, Dubai's apartment rental market saw values edge down further - less so for neighbouring Abu Dhabi, where rents exhibited a resurge with an upward movement. As always, the two main markets of the UAE continued to lure investors with relatively affordable prices and attractive rental returns on investment, with Dubai recording real estate transactions worth an impressive $43 billion by the end of August 2016.
DUBAI
In terms of yields, Dubai's apartment rental segment stayed relatively stable in August 2016, offering rental yields as high as 7.6% in select categories. Per Bayut.com's calculations, average rents across the emirate fell by 5% in August compared to values in July 2016, while average yield was recorded at 5.6% across all bed categories.
The average rent for studio apartments in Dubai fell 5% to AED 54,000 in August 2016 from AED 57,000 in July 2016. Despite the drop, the apartment category offered the highest property yield at 7.6%, still garnering abundant interest from investors. Rents for 1-bed units performed better, going up by 1% to AED 93,000 on average in August, coupled with an attractive rental yield of 6.8%. Two-bed units fetched owners AED 142,000 in August on average, declining a mere 2% compared with the average rent in July. The average yield for the category remained 6%.
Three-bed units commanded an average rent of AED 197,000 on average after falling 4% from July's AED 206,000. The rental yield of the category hovered around the 5.1% mark. Rental value for the 4+ bed category stayed stable in August at AED 304,000, with the rental yield recorded at 5%.
Top localities for renting apartments in Dubai (August 2016)
1. Dubai Marina
2. Jumeirah Lakes Towers (JLT)
3. Bur Dubai
4. Downtown Dubai
5. Dubai Silicon Oasis
Top localities for buying apartments in Dubai (August 2016)
1. Dubai Marina
2. Jumeirah Lakes Towers (JLT)
3. Downtown Dubai
4. Business Bay
5. Palm Jumeirah
ABU DHABI
The apartment rental market of Abu Dhabi posted stronger numbers than its glitzy neighbour, with the average rental value registering an increase of 3% over July 2016 to arrive at AED 130,000. At 6.6%, the average yield for apartments in the UAE capital in August also remained stronger than Dubai's.
Category-wise, studio units were the clear winners. Though rents stayed stable in August compared to July 2016, the impressive yield of 7.9% made the apartment category a clear favourite with investors. At AED 56,000, the average rent for these units could also be termed affordable.
One-bed units recorded an average rent of AED 91,000, down 1% from the July value; however, the average yield for the category was recorded at an attractive 6.8%. The average rent for 2-bed apartments increased by 2% to AED 132,000 in August from AED 129,000 in July 2016, while the average rent for 3-bed apartments fell to AED 171,000, registering a negligible decrease of 1% in August 2016. Average yield for 2-bed units in Abu Dhabi was recorded at 7.1%, while 3-bed apartments featured an average rental yield of 6.3%.
The average rent for 4+ bed apartments fell 5% to AED 235,000 in August 2016, while rental yield for the category remained 5.5%.
Top localities for renting apartments in Abu Dhabi (August 2016)
1. Al Reem Island
2. Khalifa City A
3. Al Raha Beach
4. Al Muroor
5. Corniche Area
Top localities for buying in apartments Abu Dhabi (August 2016)
1. Al Reem Island
2. Al Raha Beach
3. Al Reef
4. Saadiyat Island
5. Al Ghadeer
The two leading emirates of the UAE continue to be ahead of the regional pack when it comes to return on investment and avenues for capital value growth. With its new world charm, luxury lifestyle and expanding economy, Dubai remains head and shoulders above its peers for being a truly unique real estate market that is as advanced as some of the most sought-after investment destinations, and in most cases, much more rewarding.
On the other hand, Abu Dhabi is warming up for a development spree in the coming years that is set to boost its status as a key regional and international realty hub further. The two combined continue to not only provide immense benefits to investors, but also to the UAE economy as it persists with its drive to prosper through diversity
