Gradual Recovery of UAE Realty sector in Q2 2021

The resurgence of the UAE’s real estate market continued in Q2 2021, with some segments seeing double-digit growth in sales prices. The Q2 2021 UAE Real Estate Report by property management experts Asteco revealed that villa rental and sales rates in Abu Dhabi and Dub

BY Realty Plus
Published - Friday, 20 Aug, 2021

Gradual Recovery of UAE Realty sector in Q2 2021

The resurgence of the UAE’s real estate market continued in Q2 2021, with some segments seeing double-digit growth in sales prices. The Q2 2021 UAE Real Estate Report by property management experts Asteco revealed that villa rental and sales rates in Abu Dhabi and Dubai continued to surge, with sales prices in certain segments expanding by almost a quarter in the period under review. The report said that, “Developers delivered approximately 2,070 apartments and villas in Q2 2021 in Abu Dhabi, particularly within Yas Island, and several buildings in Al Raha Beach.” The report notes that more than 9,350 residential units are set for handover before the end of the year; however, some projects are likely to experience delays and spill over into 2022.Apartment rental rates in the capital softened marginally (by 1%) over Q1 2021. Annual declines, however, were more pronounced and averaged 8%. The report noted that mid and high-end properties were the most affected, with some units registering declines of between 10% and 15%. The report indicated that villa rental rates recorded an average increase of 1% in Q2 2021, predominantly driven by the rise in interest for well-developed villa communities located on Yas Island, Saadiyat Island, and Al Raha Beach. “Tenant movement was dominated by residents looking to upgrade/upsize, with most shifting to villas and townhouses. The increased availability of units within the mid to high-end sector facilitated this move,” the report said. Rental rates for office space in the capital remained constant in Q2 2021 from the first quarter, with landlords offering incentives such as flexible rent period, service charges waiver and/or reduced fit-out cost. Rates for offices in the capital saw an annualised drop of 4%. Demand for completed villas for sale continued to rise over the quarter, particularly within the upper-end segment, mirroring the rental market. Villa sales prices increased by 1% on average in Q2 2021, predominantly driven by Al Raha Gardens and Al Reef, which recorded 6% and 2% sales growth rates, respectively. The second quarter of 2021 saw approximately 6,650 apartments, 1,500 villas, and 750,000 sq. ft. of office space completed in Dubai, despite COVID-19 related restrictions. Most Dubai communities recorded rental rate growth in Q2 2021, resulting in an average increase of 3% and 8% for apartments and villas, respectively. While average apartment rental rates remained in contraction at 3% compared with the same period last year, villa rental rates grew by a robust 10%. Office rental rates continued their downward trajectory with quarterly and annual drops of 4% and 16%, in line with stunted employment/business growth. As a result, the report said, some landlords are looking at repurposing existing/upcoming office buildings. Sales prices recorded a significant surge, particularly in the villa segment, with an average quarterly and annual increase of 16% and 23%. Apartment sales price growth was less pronounced, but still expanded at a robust 6% over Q2 2021 and YoY. However, the growth momentum experienced in the first quarter of the year appears to be slowing as pent-up demand resulting from the COVID-19 lockdown/restrictions is absorbed. However, Expo 2020 and the continued successful rollout of the vaccines and pandemic containment measures by local and federal governments are expected to maintain the positive sentiment.