Thursday, May 30, 2013

Dubai’s real estate market outperformed that of Abu Dhabi in 1Q13

Dubai’s real estate market outperformed that of Abu Dhabi in 1Q13. Rental rates increased almost 10% QoQ in Dubai’s residential market, while Abu Dhabi’s residential market saw rental growth of 8%QoQ. In the hospitality segment, Dubai’s occupancy level increased 2 percentage points to 88% in 1Q13, while that of Abu Dhabi rose 8 percentage points to 71%. Office rental rates rose 10%QoQ in Dubai, but were stable in Abu Dhabi. Overall, prime properties drove the market, while lower grade stock was under pressure. Latest Developments
· The Abu Dhabi Executive Council announced plans to spend AED330bn on development projects, which includes construction of houses, schools, and roads, during the coming five years.
· Abu Dhabi's Department of Municipal Affairs recently issued a decree that allows properties with multiple structures on a single plot of land to be modified, expanded, or rebuilt as required.
· Dubai approved a plan to develop a new island worth AED6bn to be constructed by Meraas Holding.
· Arabtec announced that it is ready to acquire the remaining 40% stake in Target Engineering, of which it owns 60% currently.
· Emaar Properies launched a project that would offer 500 serviced apartments and 180 luxury rooms in a twin tower complex.
· Abu Dhabi's Tourism Development and Investment Co (TDIC) invited prequalification bids for the Zayed National Museum project.
· Dubai Properties Group offered 348 villas for sale as part of its residential villas project
Market Performance
The office market saw a stable-to-rising trend during 1Q13. Average rents for Grade A office space in Abu Dhabi was stable at AED1,540 per sqm; vacancy rates hovered at 37%. On the other hand, Dubai’s office market improved during the quarter; some high-quality offices spaces saw a 10%QoQ rise in rental prices. The price range for the quarter stood between AED1,690 per sqm and AED2,370 per sqm, while vacancy rates were unchanged at nearly 31%. However, improvement in the overall office market was primarily in high -quality stock; lower grade buildings faced pressure on rental and vacancy rates.
The improvement witnessed in the residential market in 4Q12 continued into 1Q13. Rental and sales prices increased across markets in Dubai and Abu Dhabi.
In Dubai,2,200 residential units, primarily apartments, were added in 1Q13. The REIDIN Residential Sale Index indicated an improvement of 18%YoY in Dubai’s market, while the REIDIN Rental Indices registered a 10%YoY rise in rents for villas and apartments in the emirate.
In Abu Dhabi, almost 2,000 residential units were added in 1Q13. Average sales prices for properties in investment areas rose 8%QoQ to AED11,000 per sqm, while average rents grew 8%QoQ to AED130,000 per annum. However, the improvement was mainly limited to prime properties in investment areas.
In 1Q13, the hospitality segment’s performance was strong with the Abu Dhabi market seeing improvement while Dubai continues to soar. In Abu Dhabi, 700 branded rooms were added
While 500 branded rooms were opened in Dubai during 1Q13. The occupancy level in Abu Dhabi rose to 71% (YTD February) from 63% in the same period in 2012. However, average daily rates (ADR) declined 1.5%YoY due to existing oversupply. Occupancy rates in Dubai surged to 88% (YTD February) from 86% in the same period in 2012. ADR also rose 5%YoY to AED276.


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